Each of the Following Is True Except For

question 47

Multiple Choice

Each of the following is true except for:

• A)a direct involuntary conversion occurs when property taken under eminent domain is replaced with other property.
• B)qualified replacement property rules are more restrictive than the like-kind property rules.
• C)an indirect involuntary conversion occurs when property is destroyed and insurance proceeds are used to purchase qualified replacement property.
• D)losses realized in involuntary conversions are deferred.
• E)all of the choices are true.

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Definitions:

Variable Costs

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

Pretax Income

The amount of income that a company earns before any taxes are deducted.

Variable Cost

Costs that vary in direct proportion to changes in the level of production or sales activity.

Fixed Costs

Costs that do not fluctuate with the level of production or sales activity, such as rent, salaries, and insurance premiums, remaining constant regardless of business volume.