The Effects of a Below-Market Loan for $100,000 Made by a Corporation

question 2

Multiple Choice

The effects of a below-market loan for $100,000 made by a corporation to its chief executive officer as an enticement to get him to remain with the company are:

• A) The corporation has imputed interest income and the employee is deemed to have received a gift.
• B) The corporation has imputed interest income and dividends paid.
• C) The employee has no income unless the funds are invested and produce investment income for the year.
• D) The employee has imputed compensation income and the corporation has imputed interest income.
• E) None of these.

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Definitions:

R-chart

A type of control chart used in statistical quality control to monitor the range of variability within a sample.

Control Limits

Predetermined boundaries in statistical process control that indicate the limits of variation acceptable for a process to be considered in control.

Control Limits

Statistical boundaries within a control chart that represent acceptable levels of variation in a process.

Permissible Variation

The acceptable range of deviation that a quality characteristic can exhibit without affecting the performance of a product or system.