Identify Which of the Following Statements Is True

question 86

Multiple Choice

Identify which of the following statements is true.

• A) 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.
• B) An S corporation should have a buy- sell agreement to guard itself against an ill- advised sale of its stock.
• C) The terms "small business corporation" and "S corporation" are synonymous.
• D) All of the above are false.

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Definitions:

Future Cash Flows

Projected incoming and outgoing cash amounts expected to be received or paid over future periods.

Fundamental Analysis

A systematic process in which a security is valued by estimating the performance of the underlying company and the future cash flows associated with owning the security. These are discounted to arrive at an intrinsic value for the security.

Future Cash Flows

Projected cash transactions that are expected to occur as part of future operations of a business.

Fundamental Analysis

An investment analysis approach that evaluates a security's intrinsic value by examining related economic and financial factors.