During the Year,Cathy Received the Following: • Dividends of $4,000

question 32

Multiple Choice

During the year,Cathy received the following: • Dividends of $4,000 from Lindsay Corporation.Cathy's father owns the stock and directed the corporation to send the dividends to Cathy.
• A car worth $30,000 for being the 1,000^th customer at a car dealership.
• $5,500 cash gift from her uncle.
• $10,000 inheritance from her grandmother.
What amount must Cathy include in gross income?

• A)$30,000
• B)$34,000
• C)$39,500
• D)$49,500

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Definitions:

Average Rate of Return

A financial ratio showing the average annual return of an investment over its lifetime, calculated as the total expected return divided by the initial cost of the investment.

Total Income

The sum of all revenue and gains for an entity over a specified period of time.

Present Value

The present value of a future amount of money or a series of future cash flows, discounted at a specific rate of return.

Internal Rate of Return

The discount rate that makes the net present value of all cash flows from a particular project equal to zero.