Which Statement Is True Regarding S Corporations

question 20

Multiple Choice

Which statement is true regarding S corporations?

• A) They are considered partnerships yet taxed like corporations as long as they follow regulations.
• B) They cannot have more than 80 shareholders.
• C) Shareholders do not report profit on their personal income tax forms.
• D) They may be formed under state law.
• E) Income is taxed only when distributed to the shareholders, who must not report the income on their personal income tax forms.

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Definitions:

MH

Often used as an abbreviation for "machine hours," representing the amount of time machines are operated in the production process.

Variable Overhead Rate Variance

The difference between actual variable overhead incurred and the standard cost allocated based on activity level.

Variable Overhead Rate Variance

The difference between actual variable overhead costs incurred and the standard variable overhead costs expected for the actual production level.

Fixed Manufacturing Overhead Budget Variance

The discrepancy between the budgeted fixed overhead costs and the actual fixed overhead incurred during production.