Brad Operates a Storage Business on the Accrual Method

question 31

Multiple Choice

Brad operates a storage business on the accrual method. On July 1 Brad paid $48,000 for rent on his storage warehouse and $18,000 for insurance on the contents of the warehouse. The rent and insurance covers the next 12 months. What is Brad's deduction for the rent and insurance?

• A) $48,000 for the rent and $18,000 for the insurance.
• B) $24,000 for the rent and $18,000 for the insurance.
• C) $24,000 for the rent and $9,000 for the insurance.
• D) $48,000 for the rent and $9,000 for the insurance.
• E) None of these is true.

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Definitions:

Habituation

The decreasing responsiveness to a stimulus after repeated exposure.

Sensitization

An increased responsiveness or sensitivity to a stimulus, often resulting from repeated exposure to the stimulus.

Emotional Distress

A mental state that can be caused by experiencing or witnessing stressful, traumatic, or upsetting events, leading to emotional suffering.

Fixed Action Pattern

An instinctive response that the presence of an effective sign stimulus releases.