Identify Which of the Following Statements Is True

question 21

Multiple Choice

Identify which of the following statements is true.

• A)Payment of deficiency dividends will prevent the imposition of the accumulated earnings tax.
• B)All corporations are exempt from the accumulated earnings tax on their first $250,000 of accumulated earnings.
• C)A health service corporation can claim an accumulated earnings credit of $250,000.
• D)All of the above are false.

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Definitions:

Common-Size Statements

Financial statements that are expressed as a percentage of a certain figure, allowing for easier comparison across time periods and companies by standardizing the data.

Percentage Of Change

A mathematical calculation used to determine the percentage increase or decrease of a value over a period of time.

Quick Assets

Those assets— mainly cash, accounts receivable, and notes receivable—that can be easily turned into cash.

Current Liabilities

Obligations that will come due within one year or within the operating cycle, whichever is longer.