Which of following generally does not indicate an unreasonable earnings accumulation?
A)loans to shareholders
B)expenditure of corporate funds for the personal benefit of the shareholders
C)planned expansion of business facilities
D)investments in properties or securities unrelated to the activities of the corporation

Question

Quizplus · Accepted Answer

Planned expansion of business facilities is a legitimate reason for retaining earnings and does not indicate an unreasonable accumulation. A, B, and D indicate unreasonable earnings accumulation because they involve the distribution of corporate funds for the personal benefit of shareholders or investments unrelated to the business activities of the corporation.

Which of Following Generally Does Not Indicate an Unreasonable Earnings