Hudson and Ilsa Want to Market a New Line of Kayaks

question 62

Multiple Choice

Hudson and Ilsa want to market a new line of kayaks and related gear under the brand name Journeys as a corporation-Journeys Inc. To avoid income taxes at the corporate level, they should form

• A)an alien corporation.
• B)a C corporation.
• C)an S corporation.
• D)a private corporation.

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Definitions:

Adjusting Entry

An amendment added to the accounting records to accurately reflect the revenues earned and expenses incurred during a period.

Interest Note

A legal document that outlines the terms under which interest will be paid on borrowed funds.

Accrued Interest

Interest that has been incurred but not yet paid or received in cash.

Notes Receivable

Written promises for amounts to be received by a business, typically recognizable as assets on the balance sheet because they represent a legal obligation for the payer to settle the debt.