Riva Borrows $10,000 That She Intends to Use for Purchasing

question 105

Multiple Choice

Riva borrows $10,000 that she intends to use for purchasing supplies for her business.She temporarily deposits the funds in her personal checking account.Prior to the deposit,the checking account held $40,000 of personal funds.Riva books a vacation for $6,000 and writes a check to the travel agency from her personal account.Later in the month,the business supplies bill arrives and Riva writes a check for $10,000 from the personal account.With respect to the interest expense on the $10,000 loan,

• A)it will all be treated trade or business expense.
• B)60 percent will be treated as personal interest expense and 40 percent as trade or business expense.
• C)it will all be treated as personal expense.
• D)20 percent will be treated trade or business expense.

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Definitions:

Target Market

A specific group of consumers identified as potential purchasers of a company's products or services, characterized by particular demographics or interests.

Brand Awareness

The extent to which consumers are familiar with the distinctive qualities or image of a particular brand of goods or services.

Breakeven Point

The point at which total costs and total revenue are equal, meaning there is no net loss or gain.

Sales Growth

An increase in the amount of products or services sold by a company over a specific period, indicating the company's performance improvement.