You Own Stock That Increases in Value by $3,000 but You

question 159

Multiple Choice

You own stock that increases in value by $3,000 but you do not cash in the stock. The $3,000 is

• A) counted as part of economic income but not part of taxable income.
• B) counted as both economic and taxable income.
• C) counted as taxable income but not economic income.
• D) counted as neither taxable nor economic income.

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Definitions:

Accounting Changes

Adjustments made to the accounting methods, estimates, or reporting entities of a firm, which must be disclosed to stakeholders to ensure transparency.

Discretionary Accruals

Accounting adjustments made by management's judgment, often to smooth out earnings or manipulate financial statements.

Increase Income

A financial objective focused on enhancing the amount of earnings generated by an individual or entity.

Managerial Strategies

Approaches and plans implemented by management to achieve organizational goals and improve company performance.