Which of the Following Statements Is Always True Regarding Accounting

question 88

Multiple Choice

Which of the following statements is always true regarding accounting methods available to a partnership?

• A)If a partnership is a tax shelter, it can use the cash method of accounting.
• B)If a non-tax-shelter partnership had "average annual gross receipts" of less than $5 million in all prior years, it can use the cash method.
• C)If a partnership has a partner that is a personal service corporation, it cannot use the cash method.
• D)If a partnership has a partner that is a C corporation, it cannot use the cash method.
• E)All of the above statements are false.

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Definitions:

Bad Debts

Unrecoverable accounts receivable that a business deems uncollectible, similar to bad debt expense but focused on the receivable aspect.

Month of Sale

Refers to the specific month in which a sale was completed or recognized, used in accounting and financial reporting.

Merchandise Purchases

The cost of goods bought for resale during a specific accounting period.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company.