George Makes $250 a Week Working as a Student Aid

question 174

Multiple Choice

George makes $250 a week working as a student aid. When he cashes his check he takes $100 to the cashiers office to pay part of his tuition. $25 goes to paying off his books, $75 goes for entertainment and $50 he keeps for unexpected expenditures. Which of the following statements is TRUE?

• A) The transactions demand for money is $125, the precautionary demand is $75 and the asset demand is $50.
• B) The transactions demand for money is $0, the precautionary demand is $250 and the asset demand is $0.
• C) The transactions demand for money is $250, the precautionary demand is $0 and the asset demand is $0.
• D) The transactions demand for money is $200, the precautionary demand is $50 and the asset demand is $0.

Recognize the importance of exit and entrance strategies in collaborative sustainability efforts.

Understand the fundamental principles of accounting and the purpose of key financial statements.

Identify the components of the accounting equation, including assets, liabilities, and owner’s equity.

Recognize the structure and purpose of a trial balance, balance sheet, and chart of accounts.

---

Definitions:

Passive Activity Loss Rules

Tax regulations that limit the deductibility of losses from passive activities to income generated by those activities.

At-risk Rules

IRS rules limiting the amount of deductible losses from business or income-producing activity based on the taxpayer's financial stake in the activity.

Passive Loss Rules

IRS regulations that prevent investors from offsetting income with losses from passive activities unless they directly participate in them.

Disallowed Loss

A loss that cannot be deducted for tax purposes, often because it does not meet specific criteria set by tax authorities.