If a Fringe Benefit Involves a Deduction from Employee Pay,which

question 8

Multiple Choice

If a fringe benefit involves a deduction from employee pay,which of the following is true?

• A)Employers may only offer the benefit to certain classes of employees.
• B)The employee must enroll in direct deposit for their pay.
• C)The fringe benefit must be subject to income tax.
• D)The amount of the deduction must be listed on the employee's pay advice.

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Definitions:

Present Value

The current value of a future amount of money or stream of cash flows given a specified rate of return.

Ordinary Annuity

A series of equal payments made at regular intervals, such as monthly or annually, over a specified period.

Annuity Due

An annuity payment arrangement where payments are made at the beginning of each period, as opposed to the end, which is the case with an ordinary annuity.

Return Requirement

A specified rate of return that investors expect to receive from an investment.