Wilma Has a $25,000 Certificate of Deposit (CD)at the Local

question 115

Multiple Choice

Wilma has a $25,000 certificate of deposit (CD) at the local bank. The interest on this certificate, $1,000, 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 $1,000 of interest in her income this year.
• B)Wilma must include the $1,000 of interest in her income when she cashes the CD.
• C)Wilma must include the $1,000 of interest in her income this year only if the bank waives the early withdrawal penalty.
• D)Wilma must include the $1,000 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:

Operating Results

The outcome of a company's primary business activities, indicating its operating income or loss over a specific accounting period.

Accountant Salaries

The earnings paid to accountants, reflecting their roles in preparing and examining financial records, ensuring accuracy, and assessing financial operations.

Product Cost

The total amount spent to produce a product, including direct labor, direct materials, and manufacturing overhead expenses.

Period Cost

Expenses that are not directly tied to the production process and are expensed in the period in which they are incurred.