Identify Which of the Following Statements Is True

question 48

Multiple Choice

Identify which of the following statements is true.

• A)If both the current and accumulated E&P have deficit balances, a corporate distribution cannot be characterized as a dividend.
• B)The shareholder's basis in property received in a nonliquidating distribution is the property's FMV reduced by liabilities assumed by the shareholder.
• C)A corporation recognizes gain when distributing money as a dividend to its shareholders.
• D)All of the above are false.

---

Definitions:

Credit Entries

Accounting entries that increase liability or equity accounts or decrease asset or expense accounts.

Cash Account

An account recording all transactions involving cash inflows and outflows.

Owner's Capital

The amount of money and other assets owned by the owner of a company that has been invested in the business.

Net Loss

Occurs when a company's total expenses exceed its total revenues during a specific period, resulting in negative earnings.