Suppose a fiRm Has a Negative UCC Balance

question 249

Multiple Choice

Suppose a firm has a negative UCC balance. They:

• A) Can claim the amount as a tax deductible expense.
• B) Must add the amount (as a positive number) to their taxable income.
• C) Should sell off all items in the asset pool.
• D) Can calculate CCA for the year using the negative balance.
• E) Should use the negative amount as a future tax loss.

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Definitions:

Merchandise

Goods or products that are bought, sold, or traded in the retail environment.

Merchandise Inventory

Goods available for sale to customers, held by a business; categorized as a current asset on the balance sheet.

Purchase Discounts

Reductions in the amount owed by a buyer to a seller for goods purchased, typically gained by paying early or within a specified period.

Freight Costs

Expenses incurred by a company to transport goods, included in the cost of goods sold or recorded as an expense depending on the terms of delivery.