Which of the Following Is Not One of the Standards

question 68

Multiple Choice

Which of the following is not one of the standards that a business must meet to qualify for status as a subchapter S corporation?

• A) The business cannot be a subsidiary of another corporation.
• B) All shareholders must agree to have the corporation formed as a subchapter S corporation.
• C) It can have no more than 75 members (husbands and wives count as one member).
• D) It can have only one class of stock issued and outstanding.
• E) The shareholders must be U.S. citizens.

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Definitions:

Average Cost

A method for inventory and cost of goods sold valuation, calculated by dividing the total cost by the number of items.

LIFO Method

Last In, First Out method; an inventory valuation technique where the most recently produced items are recorded as sold first.

Prospective Treatment

An approach in accounting where changes are applied to transactions and events from a specific date forward.

Reporting Entity

An entity, such as a company or organization, that must prepare financial statements to provide information to users.