In the Case of an Accrual Basis Taxpayer, an Item

question 48

Multiple Choice

In the case of an accrual basis taxpayer, an item of income:

• A) Is not recognized until cash is received.
• B) From services is never recognized until the services are performed.
• C) Is not recognized if the customer can return the goods.
• D) Is recognized when all the events have occurred to fix the taxpayer's right to receive the income and the amount of the income can be determined with reasonable accuracy.
• E) None of the above.

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Definitions:

Tangible

Physical and material assets that can be seen and touched, such as machinery, buildings, and equipment.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial condition.

Equipment Held

Assets in the form of machinery or other equipment that a company owns and uses in its operations.

Standby Purposes

Standby purposes involve situations where credit or resources are held in reserve to be utilized in specific circumstances or emergencies.