Teal Company Is an Accrual Basis Taxpayer

question 85

Multiple Choice

Teal company is an accrual basis taxpayer.On December 1, 2019, a customer paid for an item that was on hand, but the customer wanted the item delivered in early January 2020.Teal delivered the item on January 4, 2020.Teal included the sale in its 2019 income for financial accounting purposes.

• A)Teal must recognize the income in 2019.
• B)Teal must recognize the income in the year title to the goods passed to the customer, as determined under the state laws in which the store is located.
• C)Teal can elect to recognize the income in either 2019 or 2020.
• D)Teal must recognize the income in 2020.
• E)None of these.

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Definitions:

Genus

A class or group of entities that share common characteristics, often used in classifications and taxonomies.

Species

The basic unit of biological classification, defined as a group of living organisms consisting of similar individuals capable of exchanging genes or interbreeding.

Real Referents

Entities in the real world to which words, symbols, or other forms of representation directly relate or refer.

Genus

A category used in biological classification that ranks above species and below family, grouping species that share common characteristics.