Which of the Following Statements Is Incorrect

question 2

Multiple Choice

Which of the following statements is incorrect?

• A)Tax-deferred plans have an accumulation period and a distribution period.
• B)Normally,if a retirement plan is funded with dollars that have already been taxed,the distributions will be taxed.
• C)During the accumulation period of a qualified retirement plan no taxes are due on the earnings from the plan investments.
• D)Contributions to retirement plans are often limited in amount.

---

Definitions:

Vesting Period

The period of time before shares are unconditionally owned by an employee in an employee stock option plan.

GAAP

General Accepted Accounting Principles, a standard framework of guidelines for financial accounting used in any jurisdiction, including the detailed standards and rules developed by the Financial Accounting Standards Board in the U.S.

Compensation Expense

The total cost that a company recognizes for paying its employees, including wages, salaries, and bonuses.

Diluted Earnings

An earnings calculation that accounts for all potential shares that could be issued, showing the lowest possible earnings per share.