Norah,who Gives Music Lessons,is a Calendar-Year Taxpayer Using the Cash-Basis

question 6

Multiple Choice

Norah,who gives music lessons,is a calendar-year taxpayer using the cash-basis method of accounting.On October 1 of this year,she received $1,200 for a one-year contract beginning on that date to provide 10 lessons.She gave 6 lessons this year.How much should Norah include in income this year?

• A)$480
• B)$360
• C)$720
• D)$1,200

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Definitions:

Refunding

In finance, refunding refers to the process where an entity replaces an existing debt obligation with a new debt obligation under different terms, typically to take advantage of more favorable interest rates.

High-Coupon Debt

Bonds that offer higher interest payments due to having a high coupon rate, typically reflecting higher risk or longer maturity.

Interest Payments

Regular payments made to bondholders, representing the interest earned on the bond's face value for a certain period.

Reinvestment Rate

The rate of return available to investors when they reinvest the earnings from an investment during the life of that investment.