Bart Owns 100% of the Stock of Octo Corporation, Which

question 536

Multiple Choice

Bart owns 100% of the stock of Octo Corporation, which uses the accrual method. Bart's sister Samantha, a cash- method taxpayer, did some advertising work for Octo in November 2018. In December, Octo received a billing statement from Samantha for $5,000 and paid Samantha the $5,000 in January 2019. Samantha is a calendar- year taxpayer. When may Octo deduct the $5,000?

• A) 2018
• B) 2019
• C) Either 2018 or 2019
• D) The expense is not deductible since Samantha is Bart's sister.

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Definitions:

Horizontal Analysis

A financial analysis technique that compares line items in financial statements over multiple periods to identify trends and changes.

Horizontal Analysis

A financial analysis technique that compares historical financial information over a series of reporting periods to identify trends and growth patterns.

Sales Uncollected

The amount of sales that have been made but not yet paid for by customers, also known as accounts receivable.

Inventory Turnover

A financial metric indicating how many times a company has sold and replaced its inventory over a certain period, often used to assess efficiency.