The Multi Department Store Takes Physical Inventories at Each of Its

question 5

Multiple Choice

The Multi Department store takes physical inventories at each of its 300 stores on various dates between August 1 and September 30th each year.The company's tax year ends on the Monday closest to January 31st.The company's reduction in inventory due to breakage and theft after the last physical inventory in September 2012:

• A) Cannot be determined until the physical inventory is actually taken and therefore breakage that occurs in December 2012 will not be deductible until the year ending in January 2013.
• B) Must be delayed until the inventory has been taken as a result of the all-events test.
• C) Can be estimated and deducted for the year ending in January 2013.
• D) Can be estimated and deducted as of the end of the tax year, but only if the taxpayer uses the lower of cost or market inventory method.
• E) None on the above.

---

Definitions:

Teratogens

Agents, such as chemicals or viruses, that can cause developmental malformations or defects in an embryo or fetus.

Obstetrician

A medical doctor specializing in the care of women during pregnancy, childbirth, and the postpartum period.

Pre-Eclampsia

A disorder in pregnancy characterized by high blood pressure and often a significant amount of protein in the urine, posing risks to both the mother and fetus.

Prenatal Care

Medical and health care provided to a pregnant woman to ensure the health of both the mother and the fetus during pregnancy.