Which of the Following Is True of an S Corporation

question 50

Multiple Choice

Which of the following is true of an S corporation?

• A) It can be incorporated anywhere in the World.
• B) It cannot have more than one hundred shareholders.
• C) The corporation has two classes of stock: common stock and preferred stock.
• D) It is capitalized as a general partnership firm.
• E) Any person from anywhere in the World can become a shareholder of the S corporation.

---

Definitions:

Dividends Account

An account used in double-entry bookkeeping to record dividends paid out to shareholders during an accounting period.

Retained Earnings

The portion of net income left over for the business after it has paid out dividends to its shareholders, often reinvested into the business.

Ledger Accounts

Records within a ledger that summarize all the transactions related to a specific account, providing a complete record of financial transactions over the life of the account.

Net Income

The sum a company earns net of all expenses and taxes, deducted from its overall revenue.