Based on the Information Available,is There an Impediment to the Business

question 16

Multiple Choice

Based on the information available,is there an impediment to the business qualifying as an S Corporation?

• A) Yes, because there must be at least 100 shareholders involved.
• B) Yes, because a business must operate as a partnership for at least two years before converting to an S corporation.
• C) Yes, because a business must operate as a general corporation for at least two years before converting to an S corporation.
• D) Yes, because at least one-third of the shareholders in an S corporation must be corporations.
• E) No.

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Definitions:

Weighted Average Cost

A method of calculating the cost of goods sold and ending inventory cost by taking into account the cost of goods purchased at varying prices.

Beginning Inventory

The value of a company's inventory at the start of an accounting period, used in calculating cost of goods sold.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material, labor, and overhead costs.

Purchase Discounts

A deduction from the stated price of goods or services allowed by the seller to the buyer for prompt payment.