Which Statement Regarding the Tax System Is True

question 76

Multiple Choice

Which statement regarding the tax system is true?

• A)For small Canadian-controlled private corporations, income less than $400,000 is exempt from taxes. Thus, government receives no tax revenue from these businesses.
• B)All businesses, regardless of their legal form of organization, are taxed by the Canada Revenue Agency (CRA).
• C)Corporate income taxes are influenced by the size and location of the companies and their income types.
• D)All corporations other than nonprofit corporations are subject to corporate income taxes, which are 26.5% for the lowest amounts of income and 32.5% for the highest amounts of income.

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Definitions:

Accounts Receivable

Outstanding payments from customers for goods or services rendered by a company which have not been settled yet.

Direct Method

A way of preparing the cash flow statement where actual cash inflows and outflows from operating activities are reported, as opposed to the indirect method.

Operating Expenses

The costs associated with the normal operations of a business, such as rent, utilities, and payroll, excluding cost of goods sold.

Dividends

Payments made by a corporation to its shareholder members, usually as a distribution of profits.