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

question 80

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 as 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 as trade or business expense.

---

Definitions:

Depositions

Formal, recorded testimonies of witnesses taken under oath outside of court, used in the discovery process before a trial.

Documentary Evidence

Materials like documents, records, or written correspondence used in legal proceedings to support facts or assertions.

Oral Examinations

A form of assessment where questions are asked and answered verbally, often used in academic and professional settings.

Arbitration

A form of alternative dispute resolution where an impartial third party, the arbitrator, resolves disputes between parties outside of court.