Which of the Following Must Be Classified as "Portfolio Income

question 97

Multiple Choice

Which of the following must be classified as "portfolio income?"
I.Dividend income from an investment in Lincoln Corp. common stock.
II.Royalty income from the ownership of the mineral rights on land. The taxpayer does not share the expenses with the extraction company.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Contribution Margin Ratio

The percentage of each sales dollar remaining after deducting variable costs, indicating how much contributes to covering fixed costs and generating profit.

Operating Income

Income generated from a company's regular business operations, excluding expenses such as taxes and interest charges.

Variable Costs

Expenses that vary directly with the level of production or sales, such as materials and labor.

Break-even Sales

The amount of revenue required to cover total fixed and variable costs, resulting in zero profit or loss.