Franco Is Owner and Operator of a Cleaning Service Who

question 136

Multiple Choice

Franco is owner and operator of a cleaning service who uses the accrual method of accounting.He receives the following payments on December 31,2013,the last business day of his tax year:
$5,000 -Checks received from customers for services rendered during November and December 2013.The checks are deposited in his bank account on January 4,2014.
$4,000 -Checks received from customers for services to be rendered during 2014.The checks are received in the morning mail and deposited in his bank account on December 31,2013.
$2,400 -A check received from a customer for a service contract.The services under the contract are to be rendered in 2014.The customer met Franco at the New Year's Eve party and gives Franco the check at 11:30 p.m.The check is deposited in his bank account on January 4,2014.
How much of the $11,400 collected by Franco on December 31 must be included in his 2013 gross income?

• A)$ 5,000
• B)$ 6,400
• C)$ 7,400
• D)$ 9,000
• E)$11,400

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Definitions:

Wage Rate

The amount of compensation a worker receives per unit of time (e.g., hour, day) or per unit of output.

MRP Curve

Represents the Marginal Revenue Product curve, showing the additional revenue generated by employing one more unit of input, like labor or capital.

Resource Demand

The need or desire for specific resources (labor, capital, land, etc.) driven by businesses and individuals in the production of goods and services.

MRC

The marginal rate of change, representing how a variable changes as another variable (typically quantity) increments by one unit.