Jason Inc Maintains a Qualified Profit-Sharing Plan for Its Employees

question 102

Multiple Choice

Jason Inc. maintains a qualified profit-sharing plan for its employees. This year, Jason contributed $2,300 to Ms. Preston's profit-sharing account. Which of the following statements is true?

• A) Jason can deduct the contribution, and Ms. Preston must include the contribution in gross income.
• B) Jason can't deduct the contribution, but Ms. Preston must include the contribution in gross income.
• C) Jason can deduct the contribution, but Ms. Preston does not include the contribution in gross income.
• D) Jason can't deduct the contribution, and Ms. Preston does not include the contribution in gross income.

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Definitions:

Journal Entries

Records of financial transactions in the accounting system, where each transaction requires a debit and a credit.

Understated

Describes an item that is reported at a figure less than the actual amount.

Bank Reconciliation

Aligning an organization's bookkeeping figures for a cash account with the related details found on a bank statement.

Checkbook Balance

The balance of a checking account according to the checkbook's records, not necessarily the same as the bank statement balance.