Which of the Following Statements Is Incorrect

question 26

Multiple Choice

Which of the following statements is incorrect?

• A)S corporations must allocate income and expenses to their shareholders based on their proportionate ownership interest.
• B)The number of S corporation shareholders is unlimited.
• C)S corporation income is taxed to shareholders when earned.
• D)S corporation losses can offset shareholder income from other sources.

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Definitions:

Elasticity

A measure of how much the quantity demanded or supplied of a good changes in response to a change in price.

Elasticity

A measure of the responsiveness of demand or supply to changes in price, income, or other economic factors.

Resource Demand

The total amount of resources (such as labor, capital, and materials) that producers require to produce goods and services at various price levels.

Elastic Demand

Product or resource demand whose price elasticity of demand is greater than 1, so that any given percentage change in price leads to a larger percentage change in quantity demanded. As a result, quantity demanded is relatively sensitive to (elastic with respect to) price.