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1.) The difference between the amount of cash received and the amount of taxable income reported...

1.) The difference between the amount of cash received and the amount of taxable income reported for a transaction is called net cash flow.

True

False

2.) One dollar that is not available until two years from today is worth more than a dollar today.

True

False

3.) When analyzing the tax cost of a transaction it is best to focus on the taxpayer's marginal tax rate.

True

False

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Answer #1

1. False

Net cash flow refers to the difference between a company's cash inflows and outflows in a given period.

2. False

One dollar that is not available until two years from today is worth less than a dollar today, due to the concept of time value of money and discounting.

3. False

The tax cost of a transaction depends on the taxpayer's average tax rate for the year.

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