Wilma Has a $42,500 Certificate of Deposit (CD)at the Local

question 49

Multiple Choice

Wilma has a $42,500 certificate of deposit (CD) at the local bank. The interest on this certificate, $2,550, was credited to her account this year, but she must pay an early withdrawal penalty if she cashes in the CD before next year. Which of the following is a true statement?

• A)Wilma must include the $2,550 of interest in her income this year.
• B)Wilma must include the $2,550 of interest in her income when she cashes the CD.
• C)Wilma must include the $2,550 of interest in her income this year only if the bank waives the early withdrawal penalty.
• D)Wilma must include the $2,550 of interest in her income next year if she does not pay the early withdrawal penalty.
• E)All of the choices are correct.

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Definitions:

Capital Investment

Funds invested in a business by the owners or partners for long-term growth and financial stability.

Net Cash Flow

The amount of cash generated or used by a business in a given period, considering cash inflows and outflows from operating, investing, and financing activities.

Revenues

The overall income produced through the transaction of goods or services pivotal to a firm's core operations.

Expenses

Costs that are incurred during the operation of a business, leading to the outflow of resources or money.