Identify Which of the Following Statements Is True

question 12

Multiple Choice

Identify which of the following statements is true.

• A)The natural business year for fiscal-year election purposes is any tax year that ends within six months after the peak period of business.
• B)Section 444 permits an S corporation to elect to use a fiscal year other than a permitted year.
• C)A new corporation that is 100% owned by Johnny Blake, a cash method of accounting taxpayer, makes an S election for its initial tax year. The S corporation must also elect to use the cash method of accounting as its overall accounting method.
• D)All of the above are false.

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Definitions:

Sale Price

The amount of money for which a product or service is sold to the consumer.

Par Value

The nominal or face value of a stock or bond, as stated by the issuing company.

Prior Period Adjustment

Adjustments made to amend previously issued financial statements for errors or changes in accounting principles.

Depreciation Expense

The systematic allocation of the cost of tangible assets over their useful lives, reflecting wear and tear or obsolescence.