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for serving a d $5,000 whe response to

for serving a d $5,000 whe response to

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question

A. Expense or Income 

B. Borrowed or Donated

C. An expense or Income

D. Asset or Liability

Fred specified in his will that his nephew John should serve as executor of Fred's estate. John received $10,000 for serving as executor. John inherited $100,000 of cash from his uncle as well. He also borrowed $5,000 when he bought a new car this year. Select a response to the question "Classify each of the amounts received by John using terminology covered in this chapter." The $10,000 that John received is compensation for services and, therefore, must be included in his gross income. The $100,000 that John inherited is Y. Finally, the $5,000 that John v is not because he has an offsetting to repay this money so there is no accession to wealth.
Transcribed Image Text:Fred specified in his will that his nephew John should serve as executor of Fred's estate. John received $10,000 for serving as executor. John inherited $100,000 of cash from his uncle as well. He also borrowed $5,000 when he bought a new car this year. Select a response to the question "Classify each of the amounts received by John using terminology covered in this chapter." The $10,000 that John received is compensation for services and, therefore, must be included in his gross income. The $100,000 that John inherited is Y. Finally, the $5,000 that John v is not because he has an offsetting to repay this money so there is no accession to wealth.
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