Falcon Corporation,a C Corporation,had Gross Receipts of $3 Million in 2007,$7

question 37

Multiple Choice

Falcon Corporation,a C corporation,had gross receipts of $3 million in 2007,$7 million in 2008,and $6 million in 2009.Hawk Corporation,a personal service corporation (PSC) ,had gross receipts of $3 million in 2007,$5 million in 2008,and $4 million in 2009.Which of the corporations will be allowed to use the cash method of accounting in 2010?

• A)Falcon Corporation only.
• B)Hawk Corporation only.
• C)Neither Falcon Corporation nor Hawk Corporation.
• D)Both Falcon Corporation and Hawk Corporation.
• E)None of the above.

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Definitions:

Government Failure

Inefficiencies in resource allocation caused by problems in the operation of the public sector (government). Specific examples include the principal-agent problem, the special-interest effect, the collective-action problem, rent seeking, and political corruption.

Size and Scope

Refers to the scale of a business's operations and the breadth of its products, services, and market reach.

Invisible Hand

A concept introduced by Adam Smith to describe how individuals' self-interested actions can lead to positive outcomes for the society as a whole.

Economic Efficiency

A state where all resources are distributed in the most efficient manner possible to benefit each person or entity, thereby reducing waste and inefficiency to the minimum.