Question

9) Jack, ane 25. an employee at Big Hotels was required to say th e weekend condition of his employment. The leading was valued at $950.00 for the in d en Jackwa given lunch daily for the convenience of the play. His lunch benew e d 500.00 year. How much of the lodging and lunch henne is included in gross income S950.00 b. 500.00 Seo c. 1.450.00 e. None of the above 10) Andy, age 16, is single and is the dependent son of Joe and Alice. Andy has 200.00 of wages and $3.000,00 of interest income. Andy's standard deduction is: Audy has ocoof wages and 15.8 a. $3350.00 b .150.00 c. 1.050.00 d. 950.00 e none of the above 11) Bluff received rental income of $3,000.00 from his tenant Anthony on December 31, 2019. The rent was for January,2020. When must Bluff include the $3,000.00 in income? a. 2019 b. 2018 c. Never d. None of the above 12) XYZ Corp purchased group term life insurance for all of its employees. The employer pays all of the premiums which are equal to two times (2x) the employees' salary. Scott, age 52, earns $37.500.00 annual salary. How much must Scott recognize in income? a. $69.00 b. 70.00 c. 85.00 d. 0 e. None of the above 52 37,500. 1.23 13) Tim, age 16, is claimed as a dependent by his grandmother. During 2019, Tim had interest income from the bank of $1,000.00 and earnings from a part-time job of $800.00. Tim's taxable income is! a. $650.00 b. 2,350.00 c. 1,150.00 d. None of the above

Answer 1

11) This question relates to the principle of revenue recognition - The accounting guideline around revenue recognition requirs that revenues be shown on the income statement in the period in which they are earned, not in the period when the cash is collected. This is part of the accrual basis of accounting (as opposed to the cash basis of accounting).

Taking the basis of the above statement we can understand, we can see in the above example that the rental income belongs to the period of Jan 2020 hence the income will be rocognised in the year 2020, so the correct answer is option d) None of the above

13) As per US tax laws 2019 the standard deduction for dependent child is total earned income plus USD 350 with a cap upto USD 12200 is tax free, here in the above example the total income earned by Tim is 1000 ( bank interest) + 800 (part time income) totalling upto $ 1800/- which is less then the above slab of 12200, hence the correct option is d) None of the above