Indicate Which of the Following Statements Is/are Correct

question 96

Multiple Choice

Indicate which of the following statements is/are correct:
I.An accrual basis taxpayer who gives a creditor his note payable in payment of a claim may deduct the related expense when the note is given.
II.When a cash basis taxpayer uses a credit card to pay for an expense it can deduct the expense when the expense is charged to the credit card..
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Financial Data

Numerical information reflecting the financial health and operations of a company, including income statements, balance sheets, and cash flow statements.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity and operational efficiency of the business.

Financial Data

Information related to the financial performance of a business, including income, expenses, assets, liabilities, and equity, used for analysis and decision-making.

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects revenue from its credit sales, calculated by dividing net credit sales by the average accounts receivable.