Which of the Following Is a True Statement About the First

question 148

Multiple Choice

Which of the following is a true statement about the first payment received from a purchased annuity?

• A)The payment is included in gross income.
• B)A portion of the payment is a return of capital.
• C)The payment can only be taxed in the year after the annuity was purchased.
• D)The payment is not taxed until the annuity payments cease altogether.
• E)None of these are true statements.

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Definitions:

Gain on Disposal

The profit realized from the sale of assets, other than inventory, for more than their carrying amount on the books.

Financial Statements

Comprehensive reports created to communicate a company's financial performance and position during a specific period, often including a balance sheet, income statement, and cash flow statement.

Loss on Disposal

The monetary deficit experienced when selling an asset below its recorded value.

Income Statement

A financial statement that shows a company's revenue and expenses, resulting in a net profit or loss over a specified period.