Which of the Following Is True Concerning Dividends

question 6

Multiple Choice

Which of the following is true concerning dividends?

• A) The scheme to eliminate double taxation assumes that the corporate tax rate is 27.5% when dividends are grossed-up to include 138% of the dividend.
• B) Dividends received from a CCPC's business income that is not subject to the small business deduction are grossed-up to include 118% of the dividend.
• C) Dividends received from a CCPC's business income that is subject to the small business deduction are grossed-up to include 138% of the dividend.
• D) Eligible dividends require a 118% gross-up.

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Definitions:

Variable Manufacturing Overhead

Costs that vary with production output, such as utilities for the manufacturing plant, which are not directly tied to specific units produced.

Fixed Manufacturing Overhead

The production costs that do not vary with the volume of production, such as salaries of managers and depreciation of equipment.

Net Operating Income

The profit generated from a company's core business operations, excluding deductions of interest and taxes.

Direct Labour

The wages or salaries paid to employees who are directly involved in the manufacturing or production of goods.