John Is a Self-Employed Computer Consultant Who Lives and Works

question 31

Multiple Choice

John is a self-employed computer consultant who lives and works in Dallas. John paid for thefollowing activities in conjunction with his business. Which is not deductible in any amount?
•Dinner with a potential client where the client's business was discussed.
• A trip to Houston to negotiate a contract.
•A seminar in Houston on new developments in the software industry.
•A trip to New York to visit a school chum who is also interested in computers.

• A) 1 only.
• B) 2 only.
• C) 4 only.
• D) 3 only.
• E) None of the choices are correct.

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Definitions:

FIFO Method

First-In, First-Out method, an inventory valuation method where the first items purchased are the first ones sold, used in calculating cost of goods sold.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated as beginning inventory plus purchases minus cost of goods sold.

Periodic Inventory System

A method of inventory valuation in which physical inventory is counted at specific intervals and cost of goods sold is calculated periodically.

Specific Invoice Method

An accounting approach to valuing inventory that tracks the cost of each specific item in inventory and is sold.