Copper Corporation, a C Corporation, Had Gross Receipts of $5

question 45

Multiple Choice

Copper Corporation, a C corporation, had gross receipts of $5 million in 2013, $6 million in 2014, and $3 million in 2015. Gold Corporation, a personal service corporation (PSC) , had gross receipts of $4 million in 2013, $7 million in 2014, and $5 million in 2015. Which of the corporations will be allowed to use the cash method of accounting in 2016?

• A)Copper Corporation only.
• B)Gold Corporation only.
• C)Both Copper Corporation and Gold Corporation.
• D)Neither Copper Corporation nor Gold Corporation.
• E)None of the above.

---

Definitions:

Premium on Bonds Payable

The extra amount over the face value that investors are willing to pay for a bond, reflecting better interest or lower risk.

Debit Balance

A situation in an account where the sum of debits exceeds the sum of credits, indicating assets or expenses.

Contra Account

An account used in financial reporting to reduce the value of a related account, creating a net balance that reflects the true value of an asset or revenue.

Carrying Value

The amount at which an asset is recognized on the balance sheet, calculated as the asset's cost minus depreciation and amortization.