Which of the Following Is Not a Test to Deduct

question 80

Multiple Choice

Which of the following is not a test to deduct business expenses:

• A)The expense must be ordinary and necessary
• B)The expense must have a legitimate business purpose
• C)The expense must be reasonable
• D)The expense must be lavish and extravagant

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Definitions:

FOB Shipping Point

A shipping term indicating that the buyer assumes transportation costs and risk of loss once the goods leave the seller's premises.

Consignee

The individual or entity designated to receive goods being shipped or transported, who may not be the actual owner of the goods until certain conditions are met.

Consignment

A business arrangement in which goods are left in the possession of another party to sell, but ownership remains with the supplier until the goods are sold.

Inventory Items

Goods and materials that a business holds for the ultimate goal of resale or production in the course of operations.