Which of the Following Activities Is Not Subject to the Feeder

question 86

Multiple Choice

Which of the following activities is not subject to the feeder organization rules?

• A)At least 80% of the net income of the for-profit entity is contributed to the exempt organization for a consecutive three-year period.
• B)A trade or business where substantially all the work is performed by volunteers.
• C)A trade or business of selling merchandise where substantially all of the merchandise has been received as contributions or gifts.
• D)Only b.and c.
• E)a., b., and c.

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Definitions:

Realized Gross Profit

The gross income that a company has earned and recognized from its sales or services, after accounting for the cost of goods sold, but before deducting operating expenses.

Installment Sales Revenue

Revenue recognized from sales that are paid in installments over a period, rather than in a single transaction.

Installment Sales Method

An accounting technique used to recognize revenue from sales made on credit, where income is recognized proportionally as payments are received.

Recognized Gross Profit

Gross profit that has been realized and reported in the financial statements of a company, calculated as sales revenue minus the cost of goods sold.