A Necessary Expense Is One That Is Appropriate or Helpful

question 81

True/False

A necessary expense is one that is appropriate or helpful to the continuation of the taxpayer's business; ordinary refers to an expense that is customary and acceptable in the taxpayer's type of business.

---

Definitions:

Effective Annualized Rate

The interest rate that is annualized using compounding over a given period, providing a true reflection of the financial cost.

Simple Interest

Interest calculated on the principal portion of a loan or deposit, without compounding over time.

GICs

Guaranteed Investment Certificates, a type of Canadian investment that offers a guaranteed rate of return over a fixed period of time.

Compounded Annually

Interest on an investment calculated once a year, taking into account both the initial principal and the interest from previous periods.