Which of the Following Is True of a Close Corporation

question 9

Multiple Choice

Which of the following is true of a close corporation?

• A) Its profits cannot be reported by stock holders as income in their personal income tax returns.
• B) It is also known as a closely held corporation.
• C) It enables a large number of people to own stock.
• D) Its profits are usually taxed twice.

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Definitions:

Double-Declining-Balance

A method of accelerated depreciation where an asset's book value is reduced at double the rate of traditional straight-line depreciation.

Book Value

The net value of an asset, calculated as the original cost minus accumulated depreciation, depletion, or amortization.

Plant Asset

Long-term tangible asset that is used in the production process of a company, such as machinery, buildings, and equipment, contributing to the company's operations.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value over time.