Bart Operates a Sole Proprietorship for Which He Uses the Accrual

question 40

Multiple Choice

Bart operates a sole proprietorship for which he uses the accrual method of accounting.Bart's sister Samantha,a cash method taxpayer,did some advertising work for Bart's business in November 2013.In December,Bart received a billing statement from Samantha for $5,000.Bart paid Samantha the $5,000 in January 2014.Samantha is a calendar year taxpayer.When may Bart deduct the $5,000?

• A)2013
• B)2014
• C)Either 2013 or 2014
• D)The expense is not deductible since Samantha is Bart's sister.

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Definitions:

Identical

Identical means exactly the same, without any difference in form, nature, or substance, often used to describe objects, products, or entities.

Long-run Equilibrium

A state in which all factors of production and inputs in a market are fully adjusted to the market conditions, allowing for steady-state operation without excess supply or demand.

Perfectly Competitive

A market structure characterized by a large number of small firms, homogeneous products, and no barriers to entry or exit.

Price

The capital needed to purchase a particular good or service.