The Process of Considering the Effect of Alternative Courses of Action

question 58

Multiple Choice

The process of considering the effect of alternative courses of action on profits, assets and cash flow management is known as:

• A) operational budgeting
• B) strategic budgeting
• C) zero based budgeting
• D) activity based budgeting

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Definitions:

Passive Loss Rules

are tax rules that limit the ability to deduct losses from passive activities unless the taxpayer materially participates in the activity.

Passive Activity

Economic activities in which the investor does not materially participate, often related to rental property or businesses in which the person does not actively manage.

At-Risk Amount

The value of money that an investor can actually lose in an investment, often determining the limit of deductible losses in tax contexts.

AMT Purposes

For Alternative Minimum Tax calculations, specific adjustments and tax preference items that determine AMT taxable income.