In Which of the Following Circumstances Would a Cash Basis

question 122

Multiple Choice

In which of the following circumstances would a cash basis taxpayer be required to account for an item of income or deduction under the accrual method of accounting?

• A)Alice receives advance payment for services that she will perform and complete by the end of the following tax year.
• B)Ben paid his business property taxes at year-end even though they were not due until the end of January.
• C)Cheryl received six months of pre-paid rent on her rental property just before the end of the year.
• D)Donald prepaid a one-year service contract on his copy machine just before year-end.
• E)A cash basis taxpayer will not be required to use the accrual basis method of accounting in any of the above circumstances.

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Definitions:

Organizational Buy Classes

Categories that differentiate the purchasing habits and procedures of organizations, often influenced by the nature and complexity of transactions.

Marketing Department

A division within a company responsible for developing strategies and tactics to promote its products or services and engage with its target audience.

Embroidered

Refers to a cloth that has been decorated with needle and thread or yarn, often featuring intricate designs or patterns.

Reverse Auction

In an e-marketplace, an online auction in which a buyer communicates a need for a product or service and would-be suppliers are invited to bid in competition with each other.