Which of the Following Statements Is Correct Regarding the Taxation

question 57

Multiple Choice

Which of the following statements is correct regarding the taxation of C corporations?

• A) Schedule M-2 is used to reconcile net income computed for financial accounting purposes with taxable income reported on the corporation's tax return.
• B) The corporate return is filed on Form 1120S.
• C) Corporations can receive an automatic extension of nine months for filing the corporate return by filing Form 7004 by the due date for the return.
• D) A corporation with total assets of $7.5 million or more is required to file Schedule M-3.
• E) None of these.

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Definitions:

APC (Average Propensity to Consume)

The fraction of income that is spent on consumption as opposed to savings.

Disposable Income

The amount of money available to households for making purchases and savings after the removal of income taxes.

Saving

The act of setting aside a portion of current income for future use, or the portion of income not spent on current expenditures.

MPC (Marginal Propensity to Consume)

The proportion of additional income that is spent on consumption.