Which of the Following Conditions Will Not Cause an S

question 92

Multiple Choice

Which of the following conditions will not cause an S election to be terminated?

• A)exceeding the 100-shareholder limit
• B)creating a second class of stock having a dividend preference
• C)selecting an improper tax year
• D)failing to file a timely tax return

---

Definitions:

Accounts Receivable

Amounts owed to a company by customers for goods or services that have been delivered or used but not yet paid for.

Accrual Basis

An accounting method where revenues and expenses are recorded when they are earned or incurred, regardless of when cash transactions occur.

Cash Basis

An accounting method where revenue is recorded when cash is received, and expenses are recorded when cash is paid out, without regard to when the transactions actually occur.

Indirect Method

A technique used in cash flow statement preparation that adjusts net income for changes in non-cash accounts to compute net cash provided by operating activities.