With Respect to Income from Services, Which of the Following

question 79

Multiple Choice

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

• A)An accrual basis taxpayer will always recognize the income over the period the services will be rendered.
• 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, 2019 for $3,600, the taxpayer's 2019 gross income from the contract is $600.
• D)If an accrual basis taxpayer sells a 24-month service contract on July 1, 2019, one-half (12/24) the income is recognized in 2020.
• E)None of these.

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Definitions:

Data Processing

The collection, manipulation, and processing of data to extract meaningful information or to produce a desired output.

Capital Structure Decision

The choice a company makes regarding the mix of debt and equity that it uses to finance its operations.

Net Working Capital

A financial metric that calculates the difference between a company's current assets and its current liabilities.