On December 1,Robert,a Cash-Method Taxpayer,borrows $10,000 from the Bank for Use

question 24

Multiple Choice

On December 1,Robert,a cash-method taxpayer,borrows $10,000 from the bank for use in his business.Under the terms of the loan,the bank discounts the loan by $300,paying Robert the $9,700 cash proceeds.If Robert repays the loan next year,he may deduct

• A)$300 next year.
• B)$300 this year.
• C)$25 this year and $275 next year.
• D)nothing since the note is "noninterest-bearing."

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Definitions:

Debt Ratio

A financial ratio that measures the proportion of a company’s total debt to its total assets, indicating the degree of leverage and financial risk.

Days' Sales in Inventory

A financial metric indicating the average number of days it takes for a company to turn its inventory into sales.

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its share price.

Total Asset Turnover

A financial ratio that measures a company's efficiency in using its assets to generate sales or revenue.