Jason, an Architect, Is the Sole Shareholder of Purple Corporation

question 43

Multiple Choice

Jason, an architect, is the sole shareholder of Purple Corporation, a personal service corporation. The corporation paid Jason a salary of $225,000 during its fiscal year ending October 31, 2011. How much salary must Purple pay Jason during the period November 1 through December 31, 2011, to permit the corporation to continue to use its fiscal year without negative tax effects?

• A) $18,750.
• B) $37,500.
• C) $187,500.
• D) $225,000.
• E) None of the above.

Comprehend and apply the correct journal entries for various types of accounting adjustments including accruals, deferrals, and adjustments for prepaid expenses.

Identify the role and calculation of ratios, such as total asset turnover ratio and earnings per share, in evaluating company performance.

Understand the process of recording and adjusting for unearned revenue.

Comprehend the accounting cycle including the preparation of financial statements and closing entries.

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Definitions:

Upper Management

Refers to the highest-level executives who direct the overall policy and strategy of an organization.

Job Analysis

A job analysis is a process used to collect information about the duties, responsibilities, necessary skills, outcomes, and work environment of a particular job.

Job Design

The process of defining the way work will be performed and the tasks that a given job requires.

Reorganizing Work

The process of restructuring job roles, duties, and structures to improve efficiency or to adapt to new organizational goals.