Which of the Following Statements Regarding the Accumulated Earnings Tax

question 40

Multiple Choice

Which of the following statements regarding the accumulated earnings tax is true?

• A)The accumulated earnings tax is imposed instead of the regular corporate income tax.
• B)The accumulated earnings tax is intended to coerce corporations to pay dividends.
• C)The accumulated earnings tax is calculated by the corporation and paid on its annual corporate income tax return.
• D)All of the above statements are true.

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Definitions:

Investing Activities

Transactions and events that involve the purchase or sale of long-term assets and other investments not included in cash equivalents.

Statement Of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows and outflows a company receives from its ongoing operations, investment activities, and financing activities.

Financial Statements

Documents that provide an overview of the financial condition of a company, including the balance sheet, income statement, and cash flow statement.

Return On Equity

A financial ratio that measures a company's profitability by revealing how much profit it generates with the money shareholders have invested.