The Multi Department Store Takes Physical Inventories at Each of Its

question 43

Multiple Choice

The Multi Department store takes physical inventories at each of its 300 stores on various dates between August 1 and September 30th each year. The company's tax year ends on the Monday closest to January 31st. The company's reduction in inventory due to breakage and theft after the last physical inventory in September 2017:

• A)Cannot be determined until the physical inventory is actually taken and therefore breakage that occurs in December 2017 will not be deductible until the year ending in January 2018.
• B)Must be delayed until the inventory has been taken as a result of the all-events test.
• C)Can be estimated and deducted for the year ending in January 2018.
• D)Can be estimated and deducted as of the end of the tax year, but only if the taxpayer uses the lower of cost or market inventory method.
• E)None on the above.

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Definitions:

Situationist Argument

The situationist argument posits that people's behavior is more significantly influenced by external situational factors than by internal traits or motivations, emphasizing the power of context in shaping actions.

Predict Behavior

The process of forecasting future actions or reactions of individuals based on observed or known patterns.

Personality Trait

A characteristic way of thinking, feeling, and behaving that is consistent over time and across situations.

Everyday Intuitions

The unconscious, quick judgments and decisions that people make daily without deliberate analytical thought.