If an Acquisition Is Made Using Cash Payment Then the Acquisition

question 70

Multiple Choice

If an acquisition is made using cash payment then the acquisition is:

• A) taxable
• B) viewed as exchanging of shares and is not taxed
• C) a tax-free transaction as no capital gains or losses are recognized
• D) none of the above

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Definitions:

Contribution Margin

The amount remaining from sales revenue after all variable expenses are deducted, indicating how much contributes to covering fixed costs and generating profit.

Variable Costs

Costs that change in proportion to the level of production or sales activity within a business.

Fixed Costs

Expenses that do not change with the level of production or sales over a certain period, such as rent, salaries, and insurance.

Variable Costs

Costs that vary in direct proportion to changes in levels of production or sales.