To Avoid the Accumulated Earnings Tax, a Corporation Needs to Have

question 46

True/False

To avoid the accumulated earnings tax, a corporation needs to have a definite plan for expending the accumulated earnings.

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Definitions:

Expense Accounts

Expense accounts track the costs incurred by a business in the course of its operations, such as utilities, rent, and payroll.

Adjusted Trial Balance

A list of all accounts and their balances after adjustments, used in the preparation of financial statements.

Closing Entry

An accounting procedure used to transfer balances from temporary accounts to permanent ones at the end of an accounting period, thereby preparing the temporary accounts for the next period.

Income or Loss

The financial result of an organization's operations over a specific period, calculated as revenue minus expenses, indicating profitability or a deficit.