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14 October, 20:22

Interest paid by a corporation is a deductible operating expense, hence it decreases the firm's taxes. A. True B. False

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  1. 14 October, 23:48
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    True (A)

    Explanation:

    Interest paid which is also known as finance cost is deductible from operating income which reduces profit before tax i. e tax base and hence, reduces company tax liability.

    Interest on loan is an allowable deduction in arriving at company taxable income unlike dividend which is not allowed.
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