Mike Started a Calendar-Year Business on September 1^st of This

question 64

Multiple Choice

Mike started a calendar-year business on September 1^st of this year by paying 12 months of rent on his shop at $1,200 per month. What is the maximum amount of rent that Mike can deduct this year under each type of accounting method?

• A) $14,400 under the cash method and $14,400 under the accrual method
• B) $4,800 under the cash method and $14,400 under the accrual method
• C) $14,400 under the cash method and $4,800 under the accrual method
• D) $4,800 under the cash method and $4,800 under the accrual method
• E) $4,800 under the cash method and zero under the accrual method

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Definitions:

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