Mercedes Has a Net Long-Term Capital Gain of $3,000 and a Net

question 139

True/False

Mercedes has a net long-term capital gain of $3,000 and a net short-term capital loss of $10,000. She can deduct $3,000 of the $7,000 net loss as a deduction for adjusted gross income in the current year. She must defer realizing any tax benefit from the remaining $4,000 loss until the next year.

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Definitions:

Clock Card

A card used by employees when clocking in and out of the factory; it becomes the basis for the payroll.

Payroll

The total amount of wages, salaries, bonuses, and deductions paid to or on behalf of employees over a specific period.

Manufacturing Overhead-Control

An accounting method used to gather and monitor the costs associated with the manufacturing process but not directly tied to specific products, such as rent, utilities, and salaries.

Supplies Inventory

Items and materials held by a company in stock that are necessary for its operations but not yet used or sold.