Which of the Following Statements Is Always True Regarding Accounting

question 37

Multiple Choice

Which of the following statements is always true regarding accounting methods available to a partnership?

• A)If a partnership is a tax shelter, it can use the cash method of accounting.
• B)If a non-tax-shelter partnership had "average annual gross receipts" of less than $5 million in all prior years, it can use the cash method.
• C)If a partnership has a partner that is a personal service corporation, it cannot use the cash method.
• D)If a partnership has a partner that is a C corporation, it cannot use the cash method.

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Definitions:

Laissez Faire

An economic philosophy advocating for minimal governmental intervention in the marketplace and the free operation of supply and demand forces.

Say's Law

The principle that supply creates its own demand, meaning production necessarily leads to an equivalent level of demand in the economy.

Monetarists

Monetarists believe in the control of the supply of money as the primary method of controlling inflation and stabilizing the economy.

Balancing the Budget

The process of adjusting income and expenditure so that they equal each other, resulting in neither a budget deficit nor a surplus.