One Criterion Which Will Permit a Deduction for an Expenditure

question 1299

True/False

One criterion which will permit a deduction for an expenditure by the accrual- basis taxpayer prior to economic performance is that either the amount is not material or the earlier accrual of the item results in a better matching of income and expense.

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Definitions:

Sales Returns And Allowances

A reduction in sales revenue resulting from customers returning goods or receiving discounts for faulty or unsatisfactory products.

Sales Tax Payable

An account responsible for tracking the sales tax gathered from buyers, due to be paid to the authorities.

Accounts Receivable

Funds that customers owe to a business for goods or services already provided but not yet compensated for.

Sales Tax Payable

A liability account that accumulates the collected sales tax from customers to be remitted to the respective tax authorities.