Classify Each of the Following Statements

question 128

Multiple Choice

Classify each of the following statements.
-Maggie purchased an insurance policy on Jim's life and designated Susan as the beneficiary.

• A)No taxable transfer occurs.
• B)Gift tax applies.
• C)Estate tax applies.

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Definitions:

Liabilities

Financial obligations or debts that a company owes to external parties.

Assets

Assets that a company possesses or has rights to, which are anticipated to bring in economic gains or advantages in the future.

Operating Cycle

The period it takes for a business to buy inventory, sell products or services, and collect cash from sales.

Current Liability

Financial obligations that are due to be paid within one year or within the normal operating cycle of a business.