Which of the Following Statements Concerning Cafeteria Plans Is True

question 122

Multiple Choice

Which of the following statements concerning cafeteria plans is true?

• A)Allows employees to choose from a menu of fringe benefits or to choose cash.
• B)Most of the menu choices are nontaxable fringe benefits.
• C)Any receipt of cash option that is elected is treated as taxable compensation.
• D)All of the statements are true.

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Definitions:

Holding Costs

The expenses associated with storing inventory, including warehousing, insurance, depreciation, and opportunity costs of keeping stock.

Decoupling Function

describes the practice of separating different parts of a production process so that a delay or failure in one area does not directly impact another, enhancing flexibility and reliability.

Quantity Discount Problem

A pricing strategy issue where the cost per item lowers as the quantity purchased increases, necessitating analysis for optimal purchasing decisions.

Setup Cost

The expenses incurred to prepare equipment, machinery, or a production line for the manufacture of a new batch of goods.