Taj Operates a Sole Proprietorship,maintaining the Business Records Under the Cash

question 90

Multiple Choice

Taj operates a sole proprietorship,maintaining the business records under the cash method of accounting.Taj performs services for a client and sends the client a bill for $12,000.Six months later,before payment is received by Taj,the client files bankruptcy,with no assets available for unsecured creditors such as Taj.Taj will deduct

• A)$12,000 ordinary loss.
• B)$3,000 long-term capital loss.
• C)$3,000 short-term capital loss.
• D)$0.

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Definitions:

Utility Maximizing

Acting in a way to achieve the highest level of satisfaction possible with available resources.

Demand For Labor

The total amount of labor that employers want to hire at various wage rates, contingent on factors such as technology, the price of the goods being produced, and the availability of other inputs.

Reduced Wage

A wage that is decreased from a previous level, often due to economic pressures or changes in job responsibilities.

Income Effect

The alteration in a person's or economic system's earnings and the effect of this alteration on the demand for a particular product or service.