You Are Given the Following Facts About a Solely Owned

question 26

Multiple Choice

You are given the following facts about a solely owned S corporation. What is the shareholder's ending stock basis? $$\begin{array}{l}\begin{array} { l r } \text { Increase in AAA } & \$ 31,000 \\\text { Increase in OAA } & 6,300 \\\text { Payroll tax penalty } & 2,140 \\\text { Beginning stock basis } & 39,800 \\\text { Stock purchases } & 22,000 \\\text { Tax-exempt life insurance proceeds } & 4,800 \\\text { Life insurance premiums paid } & 2,700\end{array}\\\text { (nondeductible) }\end{array}$$

• A) $61,800
• B) $68,100
• C) $99,100
• D) $100,100

Understand how marginal cost interacts with average total cost, average fixed cost, and average variable cost.

Comprehend the concept of economies and diseconomies of scale in production.

Understand the law of diminishing returns and its implications for production.

Grasp the difference between short-run and long-run cost behaviors in a firm.

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Definitions:

Dependency Theory

A perspective in international relations and economic development that examines how developed nations perpetuate the underdevelopment of developing nations through a dependence on the global capitalist system.

Former Colonies

Territories that were once governed and exploited by a foreign power but have since gained independence.

Dependency Theory

A theory in economics and political science that suggests countries can become dependent on more developed economies, resulting in a persistent state of underdevelopment.

Multinational Corporations

Large companies that operate and provide services or goods in multiple countries beyond their country of origin.