A Responsibility Accounting System Ensures That

question 94

Multiple Choice

A responsibility accounting system ensures that

• A)generally accepted accounting principles reporting requirements are met.
• B)managers will not be held responsible for items they cannot change.
• C)99 percent of businesses utilizing such a system will be profitable.
• D)easy correlations between revenues and costs can be drawn.

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Definitions:

Section 1231

A tax term relating to the classification of property that includes depreciable property and real property (e.g., buildings and equipment) used in a trade or business and held for more than one year. gains from the sale of Section 1231 property can be taxed at more favorable capital gains rates rather than ordinary income rates.

Ordinary Loss

A loss resulting from regular business operations that is fully deductible against ordinary income on a taxpayer's tax return.

Sole Proprietor

An individual who owns and operates a business alone, bearing sole responsibility for its operations and liabilities.

Short-Term Capital Losses

Financial losses realized from the sale of an asset held for a year or less, which can be used to offset capital gains and reduce taxable income.