Identify Which of the Following Statements Is True

question 60

Multiple Choice

Identify which of the following statements is true.

• A)An S corporation should have a buy-sell agreement to guard itself against an ill-advised sale of its stock.
• B)The terms "small business corporation" and "S corporation" are synonymous.
• C)A regular corporation has common and preferred stock outstanding on January 1. On January 2, the preferred stock is canceled in a recapitalization, leaving only common stock outstanding. The corporation can make an S election for this tax year.
• D)All of the above are false.

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Definitions:

Best Efforts Basis

A commitment to perform a task to the best of one's ability, often used in financial transactions to indicate that an underwriter or other party will endeavor to sell as much of an offering as possible without guarantees.

IPO Issues

Refers to the various considerations and challenges that arise during the Initial Public Offering process when a company goes public and offers shares to the public for the first time.

Shelf Prospectus

A regulatory document filed by a company that allows it to issue shares to the public without having to re-file with the securities commission for each offering.

Syndicated Offering

A financial transaction in which multiple lenders or underwriters jointly provide funds or purchase a security issuance.