Which of the Following Statements Is Correct

question 41

Multiple Choice

Which of the following statements is correct?

• A) For the most part, our national tax rates are progressive, because higher incomes are taxed at higher average rates.
• B) Bonds issued by a municipality such as the city of Tshwane would carry a lower interest rate than bonds with the same risk and maturity issued by a private corporation such as Tshwane Retailers.
• C) Our national tax laws tend to encourage corporations to finance with debt rather than with equity securities.
• D) Our national tax laws encourage the managers of corporations with surplus cash to invest it in shares rather than in bonds.However, other factors may offset tax considerations.
• E) All of the above statements are true.

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Definitions:

Income Sharing Ratio

Income sharing ratio refers to the pre-agreed proportion used to distribute profits or losses among partners in a partnership according to their partnership agreement.

Partners' Equity

The total amount of capital contributed by partners plus their accumulated profits retained in the business.

Capital Account Balances

The financial records that show the equity ownership and investment contributions of partners or shareholders in a business.

Book Value

The net value of a company's assets minus its liabilities and intangible assets, as shown in the financial statements.