With Respect to Income from Services, Which of the Following

question 117

Multiple Choice

With respect to income from services, which of the following is true?

• A) The income is always amortized over the period the services will be rendered by an accrual basis taxpayer.
• B) A cash basis taxpayer can spread the income from a 24-month service contract over the contract period.
• C) If an accrual basis taxpayer sells a 36-month service contract on July 1, 2018 for $3,600, the taxpayer's 2018 gross income from the contract is $600.
• D) If an accrual basis taxpayer sells a 24-month service contract on July 1, 2018, one-half (12/24) the income is recognized in 2019.
• E) None of these.

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Definitions:

Gap Junctions

Specialized intercellular connections that allow for direct communication between the cytoplasm of two cells, enabling the transfer of ions and molecules.

Cytoplasm

The material or protoplasm within a living cell, excluding the nucleus, filled with organelles and is the site of most cellular activities.

Right Atrium

The upper right chamber of the heart that receives deoxygenated blood from the body through the vena cavae.

Right Ventricle

The chamber within the heart that pumps deoxygenated blood to the lungs through the pulmonary artery.