When a Closely-Held Business Is Formed as a Regular Corporation

question 14

True/False

When a closely-held business is formed as a regular corporation, earnings that are distributed to a shareholder-employee as dividends are taxed only once.

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Definitions:

Cash Equivalents

Short-term, highly liquid investments that are easily convertible into known amounts of cash with original maturities of three months or less.

Highly Liquid

Describes assets that can be quickly and easily converted into cash with minimal impact on their value.

Vouchers

Documents that serve as evidence of a transaction and propose a future payment, detailing the conditions and amounts to be paid.

Cash Register Tape

A continuous roll of paper used in a cash register to record transactions.