Question regading profit organization


Assume Hospital A is for-profit organization which pays taxes at the rate of 30 percent and Hospital B is a not-for-profit organization that pays no taxes. If depreciation expense for year that ended upon December 31, 2012 were doubled (e.g. , from $100,000 to $200,000) for both organizations, which of the following statements is most correct?

A. Net income would increase for both Hospitals A and B.

B. Net income would decrease for Hospital A but not for Hospital B.

C. Estimated cash flow would increase for both Hospitals A and B.

D. Estimated cash flow would increase for Hospital A but not for Hospital B.

E. Estimated cash flow would increase for Hospital B but not for Hospital A.

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Finance Basics: Question regading profit organization
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