Which one of the following is NOT true for a corporation?

Which one of the following is NOT true for a corporation?

A) Interest paid on bonds issued last year is tax deductible.
B) Common-stock dividends to be paid this year are not tax deductible.
C) Common-stock dividends to be paid this year will be tax deductible if the firm has a net loss for the year.
D) Preferred stock dividends to be paid this year are not tax deductible.

Answer: C

Clarity Music Company has a marginal tax rate of 34 percent and an average tax rate of 32 percent this year. It is planning to construct a new recording studio next year. The appropriate tax rate to be applied on the income generated from the new studio is

Clarity Music Company has a marginal tax rate of 34 percent and an average tax rate of 32 percent this year. It is planning to construct a new recording studio next year. The appropriate tax rate to be applied on the income generated from the new studio is

A) the average tax rate.
B) the marginal tax rate.
C) either one.
D) none of the above.

Answer: B

Trident Corporation had the following cash flows in the current year. Which one of the following is a financing activity cash flow?

Trident Corporation had the following cash flows in the current year. Which one of the following is a financing activity cash flow?

A) Rent on a warehouse amounting to $1.1 million
B) Purchase of $125,000 worth of five-year bonds issued by Towson Utilities
C) Preferred dividends to the tune of $330,000 paid to shareholders
D) Lease income received on a piece of land

Answer: C

Which one of the following is NOT a cash flow from investing activities?

Which one of the following is NOT a cash flow from investing activities?

A) buying and selling bonds or stock of other firms
B) buying or selling of land, buildings, and plant and equipment
C) cash payments of dividends to shareholders
D) issuing and paying out on insurance contracts

Answer: C