TriStar Industries Was Recently Denied the Deduction of the Life

question 9

Multiple Choice

TriStar Industries was recently denied the deduction of the life insurance premiums on the life insurance policies of their key executives on its most recent tax return.Which of the following general limitations to business profit determination best describes the reason for the Canada Revenue Agency's decision?

• A) exempt-income test
• B) personal-expense test
• C) insurance proceeds exemption
• D) reserve test

Grasp the concept of the time period assumption in accounting and its implications for the preparation of financial statements.

Understand the roles and purposes of different types of trial balances in the accounting cycle.

Differentiate between the carrying amount and actual value of depreciable assets.

Recognize the treatment and accounting for prepaid expenses and accrued salaries.

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Definitions:

10-Year Bond

A long-term debt security issued by governments or corporations with a maturity of ten years.

Transaction

The act of conducting a trade or business deal involving the exchange of goods, services, or financial assets.

Signaling

A concept in economics and finance where agents indirectly convey information about their qualities or intentions through their actions.

Liquidity

With respect to a company, the ability to pay its bills in the short run. With respect to an asset, the readiness with which it can be converted to cash.