Ester Is a Sales Representative for a Pharmaceutical Company

Ester is a sales representative for a pharmaceutical company. She receives a monthly travel allowance from the company to cover her travel costs (transportation, food, lodging, entertainment, etc.) . If Ester is not required to account to the company for the use of the travel advance
I.Ester will only have gross income to the extent her travel allowance exceeds her actual costs.
II.Ester must include the travel allowance in her gross income. Her actual costs are deductible from AGI, subject to all applicable limits on such deductions.
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A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements are correct.
D) Neither statement is correct.