Last Year, Lucy Purchased a $100,000 Account Receivable for $90,000

question 86

Multiple Choice

Last year, Lucy purchased a $100,000 account receivable for $90,000. During the current year, Lucy collected $97,000 on the account. What are the tax consequences to Lucy associated with the collection of the account receivable? No subsequent collections are expected.

• A) $0
• B) $2,000 gain
• C) $3,000 loss
• D) $13,000 loss
• E) None of the above

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Definitions:

Incentive

A motivational factor that prompts a person to act in a certain way or pursue a particular course of action.

Innate Goal

An inherent aim or objective that is hardwired into an organism, guiding its behaviors from birth.

Self-actualization

A term originating from humanistic psychology, referring to the realization or fulfillment of one's talents and potentialities, considered as a drive or need present in everyone.

Abraham Maslow

A renowned American psychologist famous for developing the hierarchy of needs theory, which suggests psychological well-being is based on satisfying fundamental human needs in a specific order, ultimately leading to self-actualization.