Poppy Corporation Was Formed Three Years Ago Poppy Corporation's Accumulated E&P on January 1 Will Be
A)$0

question 63

Multiple Choice

Poppy Corporation was formed three years ago.Poppy's E&P history is as follows: $$\begin{array} { | c | c | c | } \hline \text { Year } & \text { Current E\&P } & \text { Distributions } \\\hline 2005 & \$ 6,000 & \$ 4,000 \\2006 & 5,000 & 1,000 \\2007 & 1,000 & 0 \\\hline\end{array}$$ Poppy Corporation's accumulated E&P on January 1 will be

• A)$0.
• B)$7,000.
• C)$5,000.
• D)$12,000.

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Definitions:

Indemnify

To compensate for harm or loss sustained, or to protect someone by promising to compensate for the damage or loss they might incur.

Tort Claim

A legal claim arising from an act or omission that causes harm or injury, which is not derived from a contract breach.

Agency Relationship

A legal and fiduciary relationship where one party, the agent, acts on behalf of another, the principal, in business transactions.

Agent's Negligence

A failure by an agent to exercise the care, diligence, and skill that a reasonably prudent person would exercise in similar circumstances.