ACC 497 Final Exam - Assignment

D. The Standard Incorporation Act
2. Which of the following statements is true?
A. The exchange of stock for services rendered is not a taxable transaction.
B. The repeal of Sec. 351 would result in more existing businesses being
incorporated.
C. Section 351 was enacted to allow taxpayers to incorporate without incurring
adverse tax consequences.
D. Section 351 is an example of a negative aspect of the corporate form of business
organization.
3. Which of the following statements is true?
A. Formation of a partnership requires legal documentation.
B. An individual engaged in the active conduct of a business must elect not to be
taxed as a partnership.
C. If two people (or business entities) work together to carry on any business or
financial operation with the intention of making a profit and sharing that profit as
co-owners, a partnership exists for federal income tax purposes.
D. The partnership form of business creates double-taxation because individual
partners are taxed, and the partnership is also taxed as a separate legal entity.
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BUSINESS ENVIRONMENT AND CONCEPTS
Section 2: Economic Concepts Essential to Obtaining an Understanding of an Entity's
Business and Industry
4. What effect would a decrease in interest rates by the Federal Reserve most likely
have in the nation’s manufacturing sector, all other factors remaining constant?
A. An increase in both production and employment
B. A decrease in both production and employment
C. An increase in production but a decrease in employment
D. A decrease in production, but an increase in employment