Which of the Following Is an Example of the Conversion

question 133

Multiple Choice

Which of the following is an example of the conversion strategy?

• A)A corporation paying its shareholders a $20,000 dividend.
• B)A corporation paying its owner a $20,000 salary.
• C)A high tax rate taxpayer investing in tax exempt municipal bonds.
• D)A cash-basis business delaying billing its customers until after year end.
• E)None of the choices are correct.

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Definitions:

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of operations and output increases.

Making a Profit

The financial gain obtained when the revenue generated from a business activity exceeds the expenses, taxes, and costs associated with maintaining the operation.

Breaking Even

The point at which total costs and total revenue are equal, meaning no net loss or gain has been made.

Taking a Loss

A situation where a business or individual sells an asset for less than its purchase price, resulting in a financial deficit.