Which of the following is not true regarding accounting income? (1) the term is

Question

Which of the following is not true regarding accounting income? (1) the term is one used on Form 1041 to refer to income as computed under the applicable principal and income act as modified by the trust document (2) This represents the amount that must bee mandatorily distributed by terms of any trust that qualifies as a simple trust (3) The standards for computing accounting income are issued by the Financial Accounting Standards Bpard (4) The number must often differs significiantly from taxab;e income of the trust or estate

Explanation / Answer

(1) The term is one used on Form 1041 to refer to income as computed under the applicable principal and income act as modified by the trust document
Ans: False. Form 1041 is required to show gross income and taxable income and gains.
(2) This represents the amount that must be mandatorily distributed by terms of any trust that qualifies as a simple trust
Ans: True, the distributable income is to be distributed to the beneficiaries under the will or trust documents.
(3) The standards for computing accounting income are issued by the Financial Accounting Standards Board
Ans: True, Financial Accounting Standards Board issues the standards of computing accounting income.
(4) The number must often differs significantly from taxable income of the trust or estate
True: there may be certain un-expectable income in some year

Please let me know if any queries or doubts.

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