Legal Expenses Are Generally Deductible If They Have a Business

question 81

True/False

Legal expenses are generally deductible if they have a business purpose; they are generally not deductible if they originate from a personal transaction.

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Definitions:

Discounts Lost

Charges incurred from not taking advantage of early payment discounts offered by suppliers.

Net Method

An accounting method for recording purchases where the purchase price includes a cash discount for early payment.

Periodic Inventory System

An accounting method where inventory is physically counted and valued at set intervals, affecting the cost of goods sold calculation.

Discounts Lost

Refers to the additional cost a company incurs for not taking advantage of the cash discounts offered by suppliers for early payments.