With Respect to Income from Services, Which of the Following

question 80

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, 2017 for $3,600, the taxpayer's 2017 gross income from the contract is $600.
• D)If an accrual basis taxpayer sells a 24-month service contract on July 1, 2017, one-half (12/24) the income is recognized in 2018.
• E)None of these.

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Definitions:

Utilities

Expenses for basic services like electricity, water, and gas required for a business's operations.

Managerial Salaries

Compensation paid to individuals who are responsible for overseeing and directing the operations within a company or organization.

Overapplied

A situation in cost accounting where the allocated cost is greater than the actual cost, often requiring adjustment.

Machine Hours

A measure of production time or operational usage, calculated by the number of hours a machine is run in a specific period.