One Criterion Which Will Permit a Deduction for an Expenditure

question 1299

True/False

One criterion which will permit a deduction for an expenditure by the accrual- basis taxpayer prior to economic performance is that either the amount is not material or the earlier accrual of the item results in a better matching of income and expense.

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Definitions:

Subnormal Activity

Activities or economic conditions below the standard or average level, often indicative of a slowdown or recession.

John Maynard Keynes

A British economic thinker whose insights led to significant shifts in macroeconomic practices and the economic approaches of governments.

Economy

The organized system of human activity involved in the production, consumption, and trading of goods and services.

Say's Law

An economic principle that suggests supply creates its own demand, meaning production of goods and services generates the purchasing power needed to buy those goods and services.