Brandon Is the Operator and Owner of a Cleaning Service

question 97

Multiple Choice

Brandon is the operator and owner of a cleaning service who uses the cash method of accounting.He receives the following payments on December 31,2013,the last business day of his tax year:
$3,000 -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 over 24 months,beginning in January 2014.The customer met Brandon at a New Year's Eve party and gives Brandon the check at 11:30 p.m.The check is deposited in his bank account on January 4,2014
How much of the $9,400 collected by Brandon on December 31 must be included in his 2013 gross income?

• A)$ 2,400
• B)$ 3,000
• C)$ 5,400
• D)$ 7,000
• E)$ 9,400

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Definitions:

Strict Liability in Tort

A legal doctrine that holds individuals or entities responsible for damages or harm, irrespective of fault or intent.

Restatement (Third) of Torts

A legal publication by the American Law Institute providing a comprehensive overview of the modern American law of torts.

Restatement (Second)

A collection of model legal rules and principles that aims to simplify and clarify the law, often referring specifically to American law.

Products Liability

The area of law in which manufacturers, distributors, suppliers, retailers, and others who make products available to the public are held responsible for the injuries those products cause.