Clyde Operates a Sole Proprietorship Using the Cash Method

question 42

Multiple Choice

Clyde operates a sole proprietorship using the cash method. This year, Clyde made the following expenditures: $480 to U.S. Bank for 12 months of interest accruing on a business loan from September 1 of this year through August 31 of next year even though only $160 of interest accrued this year.
$600 for 12 months of property insurance beginning on July 1 of this year.
What is the maximum amount Clyde can deduct this year?

• A)$760
• B)$600
• C)$480
• D)$160
• E)$360

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