Which of the Following Statements Regarding the Qualified Tuition Plans

question 941

Multiple Choice

Which of the following statements regarding the qualified tuition plans (QTP) is incorrect?

• A) Distributions made from a QTP for college tuition will be tax- free in addition to qualifying for the American Opportunity credit or lifetime learning credit.
• B) Distributions can be made tax- free to pay for room and board at college.
• C) Distributions of income not used for qualified higher education expenses are taxable and subject to a 10% penalty.
• D) Katie's parents had established a QTP for Katie, but she has received a "full- ride" scholarship. Katie's parents can name her sister as a replacement beneficiary of the QTP.

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Definitions:

Standard Cost

A predetermined cost of manufacturing, selling, or administering each product or service, used as a benchmark to measure performance.

Financial Statements

Reports that provide an overview of a company's financial condition in both short and long term, including balance sheet, income statement, and cash flow statement.

Labor Quantity Variance

Labor quantity variance measures the difference between the actual number of hours worked and the number of hours that should have been worked according to standards, multiplied by the standard hourly wage rate.

Direct Labor Hours

The total hours of work contributed by employees who are directly involved in the manufacturing process.