On January 1,2014,an Accrual Basis Taxpayer Entered into a Contract

question 36

True/False

On January 1,2014,an accrual basis taxpayer entered into a contract to provide termite inspection service each month for 36 months.The amount received for the contract was $2,400.The taxpayer should report $1,600 of income in 2015.

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Definitions:

Dividends

Disbursements issued by a company to its shareholders, representing a share of the earnings distributed to its stock owners.

Residual

The amount remaining after the principal parts have been taken away or used up, often used in financial contexts.

Dividend Aversion

A theoretical behavior where investors prefer companies that retain earnings over those that pay out dividends, possibly due to tax advantages.

Capital Gains

The increase in value of an asset or investment over time, which becomes apparent when the asset is sold for more than its purchase price.