(Appendix)A Utility Bill for $315 Was Paid

question 101

Multiple Choice

(Appendix) A utility bill for $315 was paid.This activity is classified as

• A) operating.
• B) investing.
• C) financing.
• D) paying.

---

Definitions:

Gain Recognized

The profit realized from the sale or exchange of an asset, which must be reported for tax purposes.

Involuntary Conversion

Involuntary conversion is the process whereby property is destroyed, stolen, condemned, or disposed of under the threat of condemnation, and the owner receives compensation or insurance recovery.

Reinvested

The act of using dividends, interest, or profits from an investment to purchase additional shares or units of that investment.

Installment Method

The installment method is a tax provision allowing taxpayers to spread out income recognition over several years when reporting sales or transfers of property, helping to manage tax liability.