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:

Seawater

The saltwater that fills the oceans and seas, covering approximately 71% of Earth's surface.

Silica-rich Organisms

Refers to organisms that utilize silica (SiO2) in their structural makeup, often found in the cell walls or skeletons, such as diatoms and some sponges.

Chert Formation

The process by which chert, a hard, fine-grained sedimentary rock composed of microscopic silica particles, is formed, often in deep marine environments.

Seawater

A solution of various salts and minerals found in the world's oceans.