Nontax Characteristics That Should Be Considered in Choosing an Entity

question 22

Multiple Choice

Nontax characteristics that should be considered in choosing an entity form include which of the following?
I.Number of owners.
II.Limited liability for owners.
III.Ability to participate in management.
IV.Transferability of ownership interests.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Statements II and IV are correct.
• D)Statements I, II, and IV are correct.
• E)Statements I, II, III, and IV are correct.

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Definitions:

Fiscal Period

A specific time period for which an organization prepares financial statements, typically a year, but can also be a quarter or month.

Deferred Expense

A deferred expense is an expenditure that is made in advance and recorded as an asset until it is consumed or its value expires, at which point it is charged to expense.

Accrual Basis

An accounting method where transactions are recorded when they are earned or incurred, regardless of when cash is exchanged.

Matching Concept

An accounting principle that requires the expenses to be matched with the revenues they helped to generate in the same accounting period.