The Term "Double Taxation" Refers to Which of the Following

question 146

Multiple Choice

The term "double taxation" refers to which of the following?

• A)Corporations must pay income taxes on their net income,and their stockholders must pay income taxes on their dividends.
• B)In a partnership,both partners are required to claim their share of net income on their tax returns.
• C)A sole proprietorship must pay income taxes on its net income and the owner is also required to pay income taxes on withdrawals.
• D)A sole proprietorship must pay income taxes to both the state government and the federal government.

Understand how to calculate ending inventory and cost of goods sold using FIFO and LIFO methods under a perpetual inventory system.

Identify the effects of inventory costing method selection (FIFO, LIFO, Weighted Average, Specific Identification) on financial statements, specifically gross profit and income.

Recognize the components and application of the gross profit method for estimating inventory.

Understand the considerations for including items in merchandise inventory, accounting for special situations such as goods in transit, consigned goods, and damaged goods.

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Definitions:

Straight-Line Method

A method of calculating depreciation or amortization by evenly dividing the asset’s cost over its useful life.

Salvage Value

The estimated residual value of an asset at the end of its useful life, expected to be recovered after its use is completed.

Monthly Depreciation

The portion of an asset’s cost that is expensed each month over its useful life.

Old Plant Asset

An asset that has been in use for a considerable period and is often nearing the end of its useful life.