During a period of rising prices a company may change from LIFO to FIFO to:（）
A. takes advantage of tax deferrals and reduce overall taxes paid.
B. increase COGS and, hence, increase the overall cash flow position of the firm.
C. increase reported inventory and, hence, improve various accounting constructs such as working capital
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Xanos Corporation faced a 50% marginal tax rate last year and showed the following financial and tax reporting information: Deferred tax asset of $1000. Deferred tax liability of $ 5000. Based only on this information and the news that the tax rate will decline to 40%, Xanos Corporation’ s :（）
A. deferred tax asset will be reduced by $ 400 and deferred tax liability will be reduced by $ 2000.
B. deferred tax liability will be reduced by $1000 and income tax expense will be reduced by $ 800.
C. deferred tax asset will be reduced by $ 200 and the income tax expense will be reduced by $1000.
The following information has been gathered about a firm: LIFO inventory = $10000 Beginning LIFO reserve = $ 2500 Ending LIFO reserve = $ 4000 LIFO Cost of goods sold = $15000 LIFO net income = $ 1500 Tax rate is 40% What is the FIFO net income
A.
B.
C.
Which of the following definitions used in accounting for income taxes is least accurate （）
An income tax expense is an expense resulting from current period pretax income and change in deferred taxes.
B. A valuation allowance is a reserve against deferred tax assets based on the likelihood that those assets will not be realized.
C. A deferred tax liability is a balance sheet amount related to the difference between tax expense and taxes payable that is expected to be recovered from future operations
If a company is investing in new assets, using straight-line depreciation instead of accelerated depreciation in the early years of an asset’ s life will lead to lower: （）
A. assets and higher net income.
B. turnover ratios and higher assets.
C. return on equity and higher cash flow.
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