The _____ States That a Business Entity Does Not Itself

question 57

Multiple Choice

The _____ states that a business entity does not itself owe taxes on income; it only acts as a pass-through for its members to receive income.

• A) conduit theory
• B) estoppel theory
• C) entity theory
• D) concession theory
• E) aggregate theory

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Definitions:

Machine-Hours

A metric that evaluates output or operational activity by tracking the number of hours that machinery runs.

Direct Labor-Hours

Hours worked by employees directly involved in the production process, these hours are used for calculating the cost of manufacture per product.

Manufacturing Overhead

All manufacturing costs that are not directly related to the production of a product, including indirect materials, indirect labor, and other indirect costs.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to individual products or jobs, based on a certain activity, such as direct labor hours or machine hours.