Identify Which of the Following Statements Is True

question 47

Multiple Choice

Identify which of the following statements is true.

• A)Loans made to shareholders in proportion to their stock ownership in the corporation is evidence that the loans are disguised dividends.
• B)Corporate payments for the shareholder's benefit may be a taxable dividend.
• C)If the shareholder can elect to receive distributing corporation stock or money, the receipt of distributing corporation stock will be a taxable dividend.
• D)All of the above are true.

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Definitions:

Income Statement Relationships

The connections between various financial items on the income statement, illustrating how sales revenue affects net income.

Nontrade Receivables

Monetary claims against others that cannot be classified as trade receivables, often arising from financial transactions.

Loans

Sums of money borrowed that are expected to be paid back with interest.

Allowance Method

The Allowance Method is an accounting technique used to estimate and account for potential uncollectible accounts receivable, offering a more accurate reflection of the realizable value of receivables.