Starling Corporation Has Accumulated E & P of $60,000 on January

question 125

Multiple Choice

Starling Corporation has accumulated E & P of $60,000 on January 1, 2019. In 2019, Starling Corporation had an operating loss of $80,000. It distributed cash of $40,000 to Zoe, its sole shareholder, on December 31, 2019. Starling Corporation's balance in its E & P account as of January 1, 2020, is:

• A) $60,000 deficit.
• B) $20,000 deficit.
• C) $0.
• D) $60,000.
• E) None of these.

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Definitions:

Puffing

refers to exaggerated or hyperbolic comments about a product or service that are subjective opinions, not intended to be taken as facts or guarantees.

Express Warranty

An express warranty is a seller's promise or guarantee about the quality or functionality of a product, explicitly stated in the contract or marketing materials.

Physical Nature

Pertains to the material aspects or characteristics of something, focusing on its tangible properties.

Magnuson-Moss Act

A federal law enacted in 1975 to protect consumers from deceptive warranty practices, applying to warranties on consumer products.