Meredith, Age 14, Earns Wages of $2,100 from Her Modeling

question 73

Multiple Choice

Meredith, age 14, earns wages of $2,100 from her modeling. Since the funds are collected by Meredith's father and used for some of Meredith's living expenses, her father intends to include it in his gross income.
I.The person that actually earns the income will recognize it, Meredith in this case.
II.The Assignment of Income Doctrine prohibits the father from recognizing the $2,100.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Machine Hours

A measure of the amount of time a machine is operated, often used for accounting, cost allocation, or operational planning.

Labor Hours

The total number of hours worked by all employees in a specific time period.

Marginal Product

The additional output that is gained by employing one more unit of a particular input, holding all other inputs constant.

Total Output

The quantity of goods and services produced by a firm or economy over a specific period.