Which of the Following Is Descriptive of the Accumulated Earnings

question 100

Multiple Choice

Which of the following is descriptive of the accumulated earnings tax?

• A) The tax rate may not be the same as the tax rate on qualified dividends.
• B) For a closely held corporation that generates substantial earnings and never pays dividends, the tax cannot be avoided.
• C) The tax applies to both C corporations and S corporations.
• D) Only a. and b. are correct.
• E) a., b., and c. are correct.

---

Definitions:

Cost Of Goods Sold

The expenses directly related to the manufacturing of products a company sells, encompassing both materials and labor costs.

Materials Price Variance

The difference between the actual cost of materials and the expected (or standard) cost, used to control and manage costs.

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected to complete a task, multiplied by the standard hourly labor rate.

Materials Price Variance

The discrepancy between the real expense of direct materials employed in manufacturing and the anticipated standard expense for those materials.