Todd Operates a Business Using the Cash Basis of Accounting

question 118

Multiple Choice

Todd operates a business using the cash basis of accounting. At the end of last year, Todd was granted permission to switch his sales on account to the accrual method. Last year, Todd made $420,000 of sales on account, and $64,000 was uncollected at the end of the year. What is Todd's §481 adjustment for this year?

• A)Increase income by $420,000
• B)Increase income by $16,000
• C)Increase expenses by $64,000
• D)Increase expenses by $420,000
• E)Todd has no §481 adjustment this year.

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Definitions:

Conception

The moment of fertilization when a sperm cell fuses with an ovum, forming a zygote; also refers to the formation of an idea or plan.

Genotype

The genetic makeup of an organism, consisting of both the visible and concealed genes that determine its characteristics and traits.

Phenotype

The collection of traits that can be seen in a person, which emerge from how their genetic makeup interacts with their surroundings.

Genetic Mapping

Identifying the position and molecular composition of particular genes within a chromosome.