Carlotta Finds a Chest Inscribed "Sinbad" That Contains $250,000 of Cash

question 58

Multiple Choice

Carlotta finds a chest inscribed "Sinbad" that contains $250,000 of cash while diving among the coral reefs off the Virgin Islands. The US Customs and the DEA deny knowledge of the cash, so Carlotta keeps it.
I.Carlotta would not recognize any gross income if the chest contained jewels valued at $250,000, rather than the cash.
II.Recognition is necessary because Carlotta has an increase in wealth.
III.Recognition will not occur because the windfall would not be considered as derived from capital or from labor.
IV.The All-inclusive Income Concept explains the recognition of the cash as income.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Only statements I and IV are correct.
• D)Only statements I, II, and IV are correct.
• E)Only statements II, III, and IV are correct.

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Definitions:

Investigation Stage

The preliminary phase in a project or process where information is gathered and analyzed to understand a problem or situation better before making decisions.

Phased Conversion

Implementation process that introduces components of the new system in stages, until the entire new system is operational.

System Stages

The phases or steps in the lifecycle of a system, including conception, development, deployment, operation, and decommissioning.

Parallel Conversion

A method of implementing a new system where the old and new systems run simultaneously for a period of time to ensure the new system works correctly.