Identify Which of the Following Statements Is True

question 46

Multiple Choice

Identify which of the following statements is true.

• A)Any amount of net business interest disallowed due to limitation may be carried over indefinitely.
• B)If a corporation accrues an obligation to pay compensation, the corporation must make the payment by year-end to be able to deduct during the current year.
• C)Corporations can deduct up to $10,000 in capital losses per year.
• D)Net business interest is limited to 50% of adjusted taxable income.

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Definitions:

Cost Flow Assumption

An accounting method used to value the cost of goods sold and ending inventory.

Specific Identification

Specific Identification is an inventory valuation method where costs are assigned to individual items, allowing for precise cost determination of sold goods.

Cost Flow Assumption

An accounting approach to determine the value of remaining inventory and cost of goods sold, not necessarily reflecting the actual physical flow of goods.

FIFO

An accounting method for inventory valuation where the first items purchased or produced are the first ones used or sold.