Which of the Following Statements Is Always True Regarding Accounting

question 148

Multiple Choice

Which of the following statements is always true regarding accounting methods available to a partnership?

• A) If a partnership is a tax shelter, it can use the cash method of accounting.
• B) If a nontax-shelter partnership had average annual gross receipts of less than $25 million in for the last three tax years, it can use the cash method.
• C) If a partnership has a partner that is a personal service corporation, it cannot use the cash method.
• D) If a partnership has a partner that is a C corporation, it cannot use the cash method.
• E) All of these statements are always true.

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Definitions:

Risk-Free Rate

The return expected from an investment that carries no risk of loss.

Expected Return

The mean value of the probability distribution of possible returns for a specific investment or portfolio.

Multistage DDM

A version of the Dividend Discount Model that accounts for different growth rates over various stages in a company's lifecycle.

Required Return

The return a investor needs on an investment to compensate for the risk of the investment.