26 For tax purposes, private and public companies must be distinguished for which of the following reasons? a. Private companies are taxed at a higher rate. O b. Certain loans and payments to persons associated with private companies may be deemed as dividends. OC Dividends paid by private companies can only be franked to 50%. O d. A rebate of tax applies to private company dividends. QUESTION 27 A prepayment for trading stock is not an allowable deduction because: Oa. It is incurred under s. 8-1, but qualified by s. 70-15 (in that it must be 'on hand'). b. It is not incurred for the purpose of s. 8-1. Oc. prepayments are not an allowable deduction under s. 8-1. Od. It is incurred under s. 8-1, but is of a capital nature. QUESTION 28 Which of the following is correct? 1. A taxpayer cannot change between cash and accruals accounting for items of income. 2. Only the Commissioner can determine the method of accounting that a taxpayer is to use for a particularly financial period. 3. The correct method of accounting for a taxpayer's income may change when there is a change in the taxpayer's circumstances. 4. All three statements are correct. O a. Only 1 and 2 are correct. O b. Only 1 and 3 are correct. Oc. Only 3 is correct. O d. 4 is correct