Which of the Following Statements Is Correct

question 134

Multiple Choice

Which of the following statements is correct?

• A) If the tentative minimum tax exceeds the regular income tax liability, AMT is $0.
• B) The AMT exemption amount decreases as AMTI increases.
• C) The highest AMT tax rate for individuals is 26%.
• D) Only a. and c. are correct.
• E) a., b., and c. are correct.

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Definitions:

Income Summary

A temporary account used in closing process to summarize the results of a period's revenues and expenses.

Adjusting Entry

Journal entries made in accounting records at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.

Closing Entry

An accounting action that transfers the balances from temporary accounts to permanent ones at the end of an accounting period.

Owner's Equity

The residual interest in the assets of an enterprise after deducting its liabilities; represents the owner's claims against the company's assets.