Which of the Following Is True

question 15

Multiple Choice

Which of the following is true?

• A) The process of pooling mortgages or other types of loans and then selling claims or securities against that pool in a secondary market is called capitalization.
• B) Corporations pay taxes on all dividends received from other corporations, no matter their share of ownership.
• C) Corporations may pay taxes depending on their percentage of ownership.
• D) Capital gains are treated separately from ordinary corporate income for tax purposes.

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Definitions:

Asset Turnover Ratio

A financial ratio that measures the efficiency of a company's use of its assets to generate sales revenue, calculated as total revenue divided by average total assets.

Operating Lease

An operating lease is a lease agreement that allows for the use of an asset but does not convey rights similar to ownership of the asset. Operating leases are treated as operating expenses in the income statement.

Lease Criteria

The conditions under which a leasing agreement is classified as either a finance lease or an operating lease in financial accounting.

Operating Leases

Lease agreements for the use of equipment or property where the lessor retains ownership, typically for a term shorter than the asset's life.