Generally, Deductions for Additions to Reserves for Estimated Future Costs

question 4

Multiple Choice

Generally, deductions for additions to reserves for estimated future costs (e.g., an allowance for estimated warranty costs) are not allowed for Federal income tax purposes because allowing the deduction would:

• A) Result in a mismatching of revenues and expenses.
• B) Violate established public policy.
• C) Violate the all events test and economic performance requirement.
• D) Violate the tax benefit rule.
• E) None of the above.

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Definitions:

Sourcing Strategy

The approach an organization takes to manage procurement processes and supplier relationships to optimize cost, quality, and supply reliability.

Supplier Selection Criteria

The standards or benchmarks that companies use to evaluate and choose among potential suppliers.

TQM

Total Quality Management; a management approach to long-term success through customer satisfaction, focusing on continuous improvement of organizational processes.

ISO 9000

A set of international standards for quality management and quality assurance designed to help companies ensure they meet customer and other stakeholder needs.