Which of the Following Statements Is TRUE Regarding the Disposal

question 7

Multiple Choice

Which of the following statements is TRUE regarding the disposal of shares by a shareholder?

• A) The sale of shares to other shareholders is known as a 'buy-back'.
• B) The sale of shares to the corporate treasury is not allowed in the Income Tax Act.
• C) The sale of shares to the corporate treasury may result in a deemed dividend and a capital gain or loss to the shareholder.
• D) When a shareholder sells shares to other shareholders, the corporation's capital base increases.

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Definitions:

Direct Labor-hours

The sum of hours logged by workers directly engaged in creating products.

Manufacturing Overhead

Manufacturing overhead encompasses all costs of manufacturing beyond direct materials and direct labor, including expenses like factory equipment depreciation and quality control.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate manufacturing overhead costs to production activities based on a certain base, such as direct labor hours or machine hours.

Job Cost

The total cost associated with creating a specific product or completing a specific job, including materials, labor, and overhead.