Dividend Payments That Are the Result of Liquidation of Assets

question 27

Multiple Choice

Dividend payments that are the result of liquidation of assets are known as ________ and are taxed as capital gains.

• A)private earnings
• B)alternate payments
• C)return of capital
• D)rolling dividends

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Definitions:

Overhead Rate

A measure used to allocate indirect costs to produced goods, calculated by dividing total overheads by an allocation base like labor hours or machine hours.

Direct Labor Cost

The cost of labor directly involved in the production process, excluding indirect expenses like maintenance.

Predetermined Overhead Rate

This rate is used to allocate overhead costs to products or services based on a specific formula, often involving direct labor hours or direct material costs, aiding in the budgeting and costing process.

Direct Labor Costs

The wages and related benefits paid to employees who are directly involved in the production of goods or the provision of services.