Mr Crum, an Architect, Billed a Client $12,500 for Professional

question 79

Multiple Choice

Mr. Crum, an architect, billed a client $12,500 for professional services rendered. When Mr. Crum received a check in full payment from the client, he endorsed the check and mailed it to his college-age son, Paul, who cashed it and deposited the $12,500 in his own bank account. Which of the following statements is a correct application of the assignment of income doctrine?

• A) Mr. Crum must report $12,500 income on his tax return because he earned it.
• B) Paul must report $12,500 income on his tax return because he received the cash.
• C) It is illegal for Mr. Crum to transfer the check to Paul.
• D) Mr. Crum and Paul may decide which one of them reports $12,500 income on his tax return.

Understand the significance and utility of fixed budget performance reports.

Distinguish between fixed budgets and flexible (variable) budgets.

Understand the concept and calculation of variances, including price and quantity variances.

Grasp the purpose and process of using standard costs in budgeting and variance analysis.