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11 November, 00:52

How is it possible for a U. S. firm to have increasing earnings but a lower effective tax rate? The firm has expenses that are not deductible for tax purposes. Tax rates in foreign countries where the firm operates are higher. Tax rates in foreign countries where the firm operates are lower. It is not possible for a firm to have an effective tax rate different from the U. S. federal statutory tax rate.

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  1. 11 November, 01:04
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    Option C is correct.

    Tax rates in foreign countries where the firm operates are lower.

    Explanation:

    Effective tax rate is calculated as total tax payable divide by Total Income.

    In countries where tax rates are lower, tax payable will be lower leading to lower effective tax rate.
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