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

question 18

Multiple Choice

Mike started a calendar year business on September 1ˢᵗ of this year by paying 12 months rent on his shop at $1,000 per month.What is the maximum amount of rent that Mike can deduct this year under each type of accounting method?

• A) $12,000 under the cash method and $12,000 under the accrual method.
• B) $4,000 under the cash method and $12,000 under the accrual method.
• C) $12,000 under the cash method and $4,000 under the accrual method.
• D) $4,000 under the cash method and $4,000 under the accrual method.
• E) $4,000 under the cash method and zero under the accrual method.

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Definitions:

Linear Inequality

An algebraic inequality in which each term is either a constant or the product of a constant and a single variable.

Space Constraint

A limitation or restriction on the available space for a particular purpose or operation.

Floor Space

The total area taken up by all of the rooms or sections on one level of a building.

Linear Inequality

An algebraic inequality that shows the relationship between variables that form a straight line when graphed.