Bart Owns 100% of the Stock of Octo Corporation,which Uses

question 64

Multiple Choice

Bart owns 100% of the stock of Octo Corporation,which uses the accrual method. Bart's sister Samantha,a cash method taxpayer,did some advertising work for Octo in November 2014.In December,Octo received a billing statement from Samantha for $5,000 and paid Samantha the $5,000 in January 2015. Samantha is a calendar year taxpayer.When may Octo deduct the $5,000?

• A)2014
• B)2015
• C)Either 2014 or 2015
• D)The expense is not deductible since Samantha is Bart's sister.

Understand the impact of inventory policies on budgeting.

Calculate budgeted selling and administrative expenses.

Apply knowledge of budgeting to analyze and prepare financial forecasts.

Understand the timing of cash flows related to sales and purchases.

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Definitions:

Total Revenue

Total Revenue is the full amount of income generated by the sale of goods or services related to a company's primary operations.

Profit Margin

A financial metric that measures the amount of net income earned with each dollar of sales generated by comparing net income and revenue.

Days' Sales

A financial metric that calculates the average time it takes for a company to convert its inventory into sales.

Receivables Ratio

The Receivables Ratio, also known as the Accounts Receivable Turnover Ratio, measures how efficiently a company collects cash from its customers by comparing sales to the average receivables.