Which of the Following Is an Example of the Timing

question 15

Multiple Choice

Which of the following is an example of the timing strategy?

• A)A cash-basis taxpayer paying all outstanding bills by year-end.
• B)A parent employing her child in the family business.
• C)A business paying its owner a $30,000 salary.
• D)A taxpayer investing in a tax-preferred investment.
• E)None of the choices are correct.

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Definitions:

Solvency

The ability of a firm to pay its debts as they come due.

Current Ratio

A financial ratio that is computed by dividing current assets by current liabilities.

Fiscal Year

A 12-month period used for accounting purposes and preparing financial statements, which may not align with the calendar year.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term and long-term obligations, calculated as current assets divided by current liabilities.