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

question 29

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:

Fischer Projection

A two-dimensional representation of a three-dimensional organic molecule by projection onto a plane, used to depict configurations around chiral centers.

L-Glutamic Acid

An amino acid used in protein synthesis and is important in cellular metabolism, neurotransmission, and as a flavor enhancer in food.

pH

A scale used to specify the acidity or basicity of an aqueous solution, ranging from 0 to 14, where 7 is neutral, lower values are acidic, and higher values are basic.

Glutamine

An amino acid that is used in the biosynthesis of proteins, playing a key role in nitrogen metabolism.