Which of the Following Is Incorrect

question 25

Multiple Choice

Which of the following is incorrect?

• A) All salaries of a business are deductible.
• B) To be deductible, a business expense must be both ordinary and necessary.
• C) The income and expenses of a sole proprietorship business are reported on Schedule C.
• D) The purchase of a building must be capitalized.
• E) All of the above are incorrect.

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Definitions:

Off-Balance-Sheet Financing

Financial obligations not recorded on the balance sheet, often used to keep debt-to-equity ratios low.

Substantial Down Payment

A significant initial payment made towards the purchase of an asset, often indicating the buyer's commitment and reducing the amount financed.

Risk of Obsolescence

The potential for a product or technology to become outdated or less valuable due to advancements in technology, changes in consumer preferences, or market developments.

Executory Costs

Costs associated with maintaining and operating leased property, such as insurance, maintenance, and taxes, often shared by lessee and lessor.