FIFO Corporation, a Public- Traded Corporation, Pays Its CFO a Basic

question 442

Multiple Choice

FIFO Corporation, a public- traded corporation, pays its CFO a basic salary of $900,000 and a $500,000 bonus awarded for exceptional service. Her compensation package is considered reasonable compensation when compared to other similar corporations and her level of responsibilities. FIFO can deduct

• A) $900,000.
• B) $1,400,000.
• C) $1,000,000.
• D) $500,000.

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Definitions:

Consumption

The act of using goods and services by households, contributing to the overall demand in an economy.

Consumption Function

An economic formula that represents the relationship between total consumption and gross national income.

Disposable Income

The financial resources families have for expenditures and savings after income taxes are removed.

Disposable Income

The total funds available to families for spending and saving after subtracting income tax.