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Assuming an Activity Is Deemed to Be a Hobby, Discuss

question 11

Essay

Assuming an activity is deemed to be a hobby, discuss the order and limits in which expenses must be deducted.


Definitions:

Subsidiary Ledger

A detailed ledger that contains the details of transactions for individual accounts, which then summarize into the general ledger.

Control Account

An account in the general ledger used to summarize and consolidate transactions from multiple subsidiary accounts.

Accounts Payable Subsidiary Ledger

A book or file that contains, in alphabetical order, the name of the creditor and amount owed from purchases on account.

F.O.B. Destination

A shipping term indicating that the seller pays for transportation and is responsible for the goods until they are delivered to the buyer's location.

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