In Order to Deduct a Portion of the Cost of a Business

question 21

Multiple Choice

In order to deduct a portion of the cost of a business meal, which of the following conditions must be met?

• A)A client (not a supplier or vendor)must be present at the meal.
• B)The taxpayer or an employee must be present at the meal.
• C)The meal must occur on the taxpayer's business premises.
• D)None of these choices is a condition for the deduction.
• E)All of the choices are conditions for a deduction.

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Definitions:

Accounts Receivable

Unpaid amounts by customers for goods or services already supplied by a company.

Write Off

The accounting action of declaring that an asset is partially or totally worthless, reducing its value to zero in the books.

Contra-Revenue Account

An account that is used to record reductions in gross revenue, such as sales returns, allowances, and discounts.

Allowance Method

An accounting technique used to account for bad debts by estimating uncollectible accounts at the end of each period.