Riva Borrows $10,000 That She Intends to Use for Purchasing

question 105

Multiple Choice

Riva borrows $10,000 that she intends to use for purchasing supplies for her business.She temporarily deposits the funds in her personal checking account.Prior to the deposit,the checking account held $40,000 of personal funds.Riva books a vacation for $6,000 and writes a check to the travel agency from her personal account.Later in the month,the business supplies bill arrives and Riva writes a check for $10,000 from the personal account.With respect to the interest expense on the $10,000 loan,

• A)it will all be treated trade or business expense.
• B)60 percent will be treated as personal interest expense and 40 percent as trade or business expense.
• C)it will all be treated as personal expense.
• D)20 percent will be treated trade or business expense.

---

Definitions:

Deuterostome Development

A characteristic mode of animal development marked by radial, indeterminate cleavage and the formation of the anus from the blastopore, common to vertebrates and some invertebrates.

True Tissues

Distinct groups of specialized cells that work together to perform specific functions, found in multicellular organisms.

Terrestrial Existence

Life forms or ecosystems that exist primarily or entirely on land, as opposed to aquatic or marine environments.

Adaptations

Adaptations are traits or behaviors that have evolved over time to allow an organism to better survive in its environment.