Richard and Alice Are Divorced and Under the Terms of Their

question 26

Multiple Choice

Richard and Alice are divorced and under the terms of their written divorce agreement signed on December 30, 2009, Richard was required to pay Alice $1,500 per month of which $600 was designated as child support. He made 12 such payments in 2016. Additionally, Richard voluntarily paid Alice $1,200 per month for 12 months of 2016, no portion of which was designated as child support. Assuming that Alice has no other income, her tax return for 2016 should show gross income of:

• A)$0
• B)$9,600
• C)$10,800
• D)$18,000
• E)None of the above

Learn about replacement charts and their usage in succession planning.

Differentiate between Markov analysis and other business tools.

Understand the purpose and process of severance pay.

Recognize benchmarking as a tool for organizational improvement.

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Definitions:

Retaining Earnings

Profits that a company has decided to keep or reinvest in itself rather than pay out as dividends to its shareholders.

Cost of Debt

The effective rate that a company pays on its total debt, reflecting the expense of borrowing funds.

WACC

Weighted Average Cost of Capital; a calculation of a firm's cost of capital where each category of capital is proportionately weighted, including equity, debt, preferred stock, and any other long-term debt.

Debt Financed

The use of borrowed funds to purchase assets or fund operations, typically involving interest payments to the lender.