A tax shield is equal to the reduction in:
A)Tax liability resulting from a deductible expense
B)Taxable income resulting from a deductible expense
C)Cash flow from an expense
D)Net income

Question

Quizplus · Accepted Answer

A tax shield refers to the reduction in tax liability resulting from a deductible expense. It arises from the fact that deductible expenses reduce taxable income, which, in turn, reduces the amount of taxes paid. Therefore, Option A is the correct answer.

A Tax Shield Is Equal to the Reduction In