Liz and Jeff Live in California,a State That Recognizes Community

question 24

Multiple Choice

Liz and Jeff live in California,a state that recognizes community property.Jeff is a machinist who makes $30,000 a year.Liz is the owner of a franchise where her take-home profit is approximately $75,000 a year.Jeff and Liz purchased a house during their marriage wherein Liz paid three-fourths of the purchase price and Jeff paid one-fourth.Which of the following statements is correct with regard to Jeff and Liz?

• A) Each owns one-half of the real property and other assets they acquire during the marriage.
• B) The community property rules allow Jeff and Liz to maintain separate ownership of assets they each bring to the marriage or inherit.
• C) Community property cannot be sold by Jeff or Liz without consent by the other.
• D) All of the above are correct.

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Definitions:

Incremental Value

The additional or extra value generated by undertaking a new project or action, calculated as the difference in total value with and without the project.

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment, calculated by discounting future cash flows to the present value.

Company Stock

Shares of ownership in a corporation, representing a claim on the company's assets and earnings.

True Cost

The complete expense of a product or service, accounting for all financial, economic, and environmental factors.