TQK, LLC Provides Consulting Services and Was Formed on 1/31/X5

question 81

Multiple Choice

TQK, LLC provides consulting services and was formed on 1/31/X5. Aaron and ABC, Inc. each hold a 50% capital and profits interest in TQK. If TQK averaged $7,000,000 in annual gross receipts over the last three years, what accounting method can TQK use for X9?

• A) Accrual method.
• B) Cash method.
• C) Accrual method or Cash method.
• D) Hybrid method.

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Definitions:

Salvage Value

An asset's forecasted value after its period of usability has concluded.

Cost

The amount of money or resources expended to obtain an asset, service, or achieve a specific outcome.

Annual Net Income

The total profit of a company after subtracting all expenses from revenue for one year.

Net Present Value Method

A financial analysis technique that discounts future cash flows to present value to assess the profitability of an investment or project.