Theater,Inc

question 120

True/False

Theater,Inc.,an exempt organization,owns a printing company,Printers,Inc.,which remits 85% of its profits to Theater,Inc.Since Printers remits at least 85% of its profits to Theater,neither Theater,Inc.,nor Printers,Inc.,must pay income tax on this $85,000 ($100,000 × 85%).

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Definitions:

Profit-Leverage Effect

A financial concept indicating that a reduction in purchasing costs can have a more significant impact on a company's profit than an equivalent increase in sales.

Cost of Purchases

The total expense incurred in acquiring goods and services, including price, shipping, and handling, among other costs.

Annual Sales

The total revenue a company generates from its operations over a one-year period.

Supply Chains

Networks involving organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer.