Jones, Inc

question 386

Multiple Choice

Jones, Inc., a calendar- year taxpayer, is in the air conditioner repair business. The business uses the cash method. In December of the current year, Jones charged $100 of supplies at Refrigeration, Inc., (he will pay the credit card bill in January) and also purchased $600 of supplies at XYZ on open account (he will make a payment on the open account in January) . What is the amount that is deductible by Jones, Inc., in the current year?

• A) $700
• B) $100
• C) $600
• D) The amounts must be capitalized and charged to expense as used.

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Definitions:

Long-lived Assets

Assets that are expected to provide economic benefits over a period of time longer than one fiscal year.

Cumulative Weighted Average Expenditure

The sum of all expenditures over a period weighted by the time each amount was incurred, providing a means to calculate average costs or investments over that period.

Construction Loan

A short-term loan provided to finance the building of a property or real estate project, typically converting into a long-term mortgage upon completion.

Capitalized Cost

The total of all costs incurred to acquire an asset and prepare it for its intended use, often including the purchase price and costs of installation.