An Individual's Income for the Year Includes Both Dividend and Interest

question 55

Multiple Choice

An individual's income for the year includes both dividend and interest payments.Which of these statements correctly applies to that individual's tax liability?

• A)dividends are taxed; tax on interest payments is paid at the corporate level.
• B)interest is taxed; tax on dividend payments is paid at the corporate level.
• C)both dividend and interest payments are taxed at the personal level.
• D)all taxes on dividend and interest payments are paid at the corporate level.

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Definitions:

Margin

Typically refers to the difference between the selling price of a product and its cost, used to measure profitability.

Turnover

The rate at which inventory or assets are sold and replaced or the rate at which employees are replaced in a business.

Residual Income

The amount of income that an investment or project generates above the minimum rate of return.

Residual Income

The profit left over after all necessary capital expenses are subtracted from the operating income, serving as an indicator of financial success.