A Corporation Is Considered to Be Closely Held When

question 66

Multiple Choice

A corporation is considered to be closely held when:

• A) only a few shareholders exist.
• B) the market value of the shares is stable.
• C) it operates in a small geographic area.
• D) management also serves as the board of directors.

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Definitions:

Annual Fixed Expenses

Costs that do not vary with the level of production or sales over a year, such as rent, insurance, and salaried personnel wages.

Break-Even

The point at which total costs equal total revenue, resulting in neither profit nor loss.

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials or production supplies.

Fixed Costs

Expenses that do not change with the level of output or activity, such as rent, salaries, and insurance premiums.