Question

QUESTION 1

The "pass through" concept in taxation means that:

                               

a. Profits are taxed only at the entity level.

                               

b. Profits are taxed only at the owner level.

                               

c. Profits are taxed at both the entity and owner level.

                               

d. The taxpayer can elect to have a portion of the profits pass through to the next fiscal year.

QUESTION 3

The primary mechanism by which a corporation distributes a new security is called:

                               

a. Selling short

                               

b. Price fixing

                               

c. Underwriting

                               

D. Liquidation of corporate assets

Answer 1

Q1) Pass through concept in taxation means that owners pay the taxes on the income generated from the firm or entity and not the entity itself.

The correct answer is: B)

Q3) When a corporation wants to raise funds, they issue new securities like bonds or shares. These corporations take help from investment banks and use their expertise and customers to sell their securities. This is called underwriting. Corporation can sell directly to the public but it is costly.

The right answer is C)