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A corporation.
A sole proprietorship.
2. Michael Cohn is a "member" (a type of owner) of a marine supply business. Michael's business is
a sole proprietorship.
a corporation.
a general partnership.
3. The Counting House, Inc., purchased 5-year property class equipment for $60,000. It uses the MACRS
method of depreciation. What is tax depreciation for the second year of the asset's life?
$12,000
$19,200
$20,000
$24,000
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9/29/23, 10:30 PM Chapter 2 Multiple-Choice Quiz
4. A corporation in which you are a shareholder has just gone bankrupt. Its liabilities are far in excess of its
assets. You will be called on to pay:
a proportional share of all creditor claims based on the number of common shares
that you own.
an amount that could, at most, equal what you originally paid for the shares of
common stock in the corporation.
nothing.
5. A 30-year bond issued by Gary's Plaid Pants Warehouse, Inc., in 1997 would now trade in the
primary money market.
legal restrictions.
ease of organization.
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9/29/23, 10:30 PM Chapter 2 Multiple-Choice Quiz
control inflation.
Bank of America.
The economic unit that is willing to pay the highest expected return
receives the funds.
Receipt of the funds is rotated so that each economic unit can receive
them in turn.
11. Assume that a "temporary" additional (US federal tax related) first-year bonus depreciation of 50
percent applies to a new, $100,000 piece of equipment purchased by Bellemans Chocolatier, Inc. The asset
has a $10,000 estimated final salvage value. If this asset is fully depreciated for tax purposes over its useful
life, the overall amount that Bellemans will have depreciated for tax purposes is .
$90,000
$100,000
$135,000
$150,000
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