Kristine Is the Controller of Evans Company

question 66

Multiple Choice

Kristine is the controller of Evans Company. Evans provides all management level employees with medical insurance through a self-insured plan. During the current year, Kristine has $2,650 in medical expenses reimbursed by the plan. The income tax effect of the reimbursements Kristine receives is:
I.Kristine excludes the value of the reimbursement.
II.Kristine includes $2,650 in her gross income.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Security Market Line

A representation of the relationship between the risk of an investment and its expected return, used in the Capital Asset Pricing Model.

Expected Return

The average of all possible investment returns, each weighted by its probability of occurrence.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, used in statistics to quantify the degree of difference from the average.

Beta

A metric indicating the level of fluctuation or inherent risk in a security or portfolio relative to the overall market.