Due to a Shortage of Cash,East Coast Entertainment Company,an Accrual

question 29

Multiple Choice

Due to a shortage of cash,East Coast Entertainment Company,an accrual basis taxpayer,could not pay its November 2013 utility bill on time.In February of 2014,East Coast Entertainment pays the utility bill.
I.East Coast can deduct the expense on either its 2013 or 2014 tax return.
II.East Coast cannot deduct the utility expense in 2013 because it is paid in 2014.

• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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