Lilac, Inc Which of the Following Statements Is Correct?
A)Lilac, Inc

question 4

Multiple Choice

Lilac, Inc., receives its support from the following sources. $\begin{array}{lc}\text { Governmental unit A, for services rendered } & \$ 20,000 \\\text { General public, for services rendered } & 40,000 \\\text { Gross investment income } & 50,000 \\\text { Contributions from individual substantial } & 15,000 \\\text { contributors (disqualified persons) } &\end{array}$ Which of the following statements is correct?

• A)Lilac, Inc., is a private foundation because it satisfies the external support test and fails the internal support test.
• B)Lilac, Inc., is a private foundation because it satisfies both the external support test and the internal support test.
• C)Lilac, Inc., is not a private foundation because it satisfies both the external support test and the internal support test.
• D)Lilac, Inc., is a private foundation because it fails both of the internal and external support tests.
• E)None of the statements is true.

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Definitions:

Stock Dividend

A dividend payment made in the form of additional shares rather than a cash payout.

Stock Split

An increase in a firm’s shares outstanding without any change in owner’s equity.

Retained Earnings

Profit that is not distributed to the shareholders but is kept by the company for future investment or to pay off debt.