Which of the Following Statements Is True About Flexible Spending

question 17

Multiple Choice

Which of the following statements is true about flexible spending accounts?

• A)They can only be used for dependent-care expenses.
• B)They restrict pretax employee contributions.
• C)They work best to the extent that employees have unpredictable expenses.
• D)Funds must be used by the plan's year end or they revert to the employer.
• E)They cause a reduction in take-home pay.

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Definitions:

Apples

Edible fruits from the Malus domestica tree, characterized by their sweet taste and variety of colors, and consumed worldwide.

Bananas

A type of elongated, edible fruit produced by various kinds of large herbaceous flowering plants in the genus Musa.

Perfect Substitute

Goods that a consumer perceives as identical in utility, meaning the consumer is willing to substitute them for one another at a constant rate.

Utility Function

A mathematical representation that expresses how a consumer's total satisfaction or happiness is influenced by their consumption of different goods and services.