Jake Is the Sole Shareholder of an S Corporation That

question 116

True/False

Jake is the sole shareholder of an S corporation that earned $50,000 in 2012. The corporation was short on cash and therefore distributed only $15,000 to Jake in 2012. Jake is required to recognize $15,000 of income from the S corporation in 2012.

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Definitions:

Other Income

Income derived from sources other than a company's primary business operations, such as interest or rental income.

Revenue

The total amount of money received by a company for goods sold or services provided during a certain period.

Record Payments

The process of documenting all money transfers made to settle debts or for purchases in the accounting records of a company.

Perpetual Inventory Method

An accounting method for maintaining continuous records of inventory balances, with updates made for each purchase and sale transaction.