Answered: Statement 1: If the proceeds of life…

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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1. Statement 1: If the proceeds of life insurance are held by the insurer under an agreement to pay interest thereon, the interest payments shall be included in gross income. Statement 2: The value of property acquired by gift, bequest, devise or descent, including it fruits and income, shall be excluded from the gross income. a. Both statements are true b. Both statements are false c. Only statement 1 is true d. Only statement 2 is true 2. Case 1: Avy made a total of P5,000 contributions for SSS, Philhealth, Pag-ibig, and union dues. The P5,000 contributions form part of Avy's gross compensation. However, in computing her taxable compensation, such amount must be excluded. Case 2: Avy suddenly got sick and was hospitalized for 1 month. She received a certain amount of benefit from SSS. Her hospital bills were also reduced by her philhealth benefit. The amount received by Nora from SSS and the reduction in her hospital bills constitute taxable compensation to Nora. a. Both cases are correct b. Both cases are incorrect c. Only case 1 is correct d. Only case 2 is correct 3. Statement 1: Compensation in the form of stocks of the company is not gross income on the part of the employee. Statement 2: Other allowances granted to an employee do not form part of the gross income of the employee. a. Both statements are true b. Both statements are false c. Only statement 1 is true d. Only statement 2 is true

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