Which of the Following Statements Regarding Alternative Business Forms Is

question 53

Multiple Choice

Which of the following statements regarding alternative business forms is true?

• A) If an S corporation's election terminates, the corporation is forced to liquidate.
• B) Some states treat S corporations as taxable corporations for purposes of corporate franchise taxes.
• C) Generally, the transfer of property to a new partnership in exchange for a partnership interest is a taxable event.
• D) The owners of a new business should be indifferent between operating as an S corporation and a partnership.

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Definitions:

Administrative Expense

Expenses that are not directly tied to the production or selling of goods and services, such as salaries of senior executives and costs of general services.

Period Cost

Costs that are not directly tied to the production process and are expensed in the period they are incurred, such as selling and administrative expenses.

FIFO Cost Flow

An inventory valuation method where the oldest inventory items are recorded as sold first, leaving the newest items in inventory.

Finished Goods Inventory

Finished Goods Inventory consists of the completed products that are ready for sale but have not yet been sold, representing one of the components of a company's total inventory.