Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Under a nonqualified annuity, interest is taxed after the:

earnings are withdrawn from the contract

annuity is fully surrendered

interest is credited to the account

initial investment is made

Previous problemNext problem

Verified step by step guidance

Understand the concept of a nonqualified annuity: A nonqualified annuity is a type of investment where contributions are made with after-tax dollars, and the earnings grow tax-deferred until withdrawn.

Review the taxation rules for nonqualified annuities: In general, the interest or earnings are taxed only when they are withdrawn from the contract, not when they are credited to the account or when the initial investment is made.

Analyze the options provided in the problem: The key is to identify the point at which the earnings become taxable. This typically occurs when the earnings are distributed or withdrawn from the annuity contract.

Clarify the meaning of 'fully surrendered': Fully surrendering an annuity means cashing out the entire contract, which would trigger taxation on the earnings. However, taxation occurs at the point of withdrawal, not necessarily at the surrender itself.

Conclude that the correct answer aligns with the principle of taxation upon withdrawal: Interest is taxed after the earnings are withdrawn from the contract, as this is when the tax-deferred growth becomes taxable income.