Choose the Statement That Correctly Summarizes the Tax Advantage of Raising

question 121

Multiple Choice

Choose the statement that correctly summarizes the tax advantage of raising money by issuing bonds instead of ordinary shares:

• A) The amount paid by the corporation to redeem bonds at maturity date is deductible in computing income subject to corporate income tax.
• B) Interest payments are deductible in determining income subject to corporate income tax; dividends are not deductible.
• C) A corporation must pay tax on the sales price of shares issued, but is not taxed on the amount received when bonds are issued.
• D) Both interest and dividends paid are deductible in computing taxable income, but since interest must be paid annually, the corporation usually gets a larger tax deduction over the life of the bonds payable.

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Definitions:

Participant Observation

A qualitative research method where the researcher immerses themselves in a group or community to observe behaviors and interactions from within.

Covert Observation

Observational research in which the subject(s) are unaware that they are being observed, often used to gather more natural behavior data.

Environment

The surrounding physical, biological, and socioeconomic conditions and factors that influence the growth, development, and survival of organisms and human communities.

Personality

A set of emotional, attitudinal, and behavioral response patterns of an individual, distinguishing one person from another.