Which of the Following Is True Concerning Dividends

question 9

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 eligible 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 typically grossed-up to include 116% of the dividend.
• C)Dividends received from a CCPC's business income that is subject to the small business deduction are typically grossed-up to include 138% of the dividend.
• D)Eligible dividends require a 116% gross-up.

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Definitions:

Unit Price

The cost assigned to a single unit of a product or service.

Journal Entries

Records of financial transactions in a company’s accounting system, providing a chronological record.

Periodic Inventory System

An inventory system that updates inventory balance after a certain period, typically incorporating physical counts to determine cost of goods sold.

Cost of Goods Sold

Directly incurred costs for materials and labor necessary for the production of goods a business sells.