The Annual Increase in the Cash Surrender Value of a Life

question 53

Multiple Choice

The annual increase in the cash surrender value of a life insurance policy:

• A)Is taxed according to the original issue discount rules.
• B)Is not included in gross income because the policy must be surrendered to receive the cash surrender value.
• C)Reduces the deduction for life insurance expense.
• D)Is exempt because it is life insurance proceeds.
• E)None of these.

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Definitions:

Perpetual Inventory System

A method of inventory management where inventory levels are updated in real-time after every sale or purchase transaction.

Physical Count

A periodic inventory auditing process where a business physically counts its entire inventory to verify stock and identify discrepancies.

Perpetual Inventory System

A system of accounting that immediately logs the sale or acquisition of inventory using computerized point-of-sale systems and software for managing enterprise assets.

Freight Costs

Expenses associated with transporting goods from one location to another, often considered part of the cost of sales or inventory.