Twin City Manufacturing Corporation Is an Accrual Basis Taxpayer

question 73

Multiple Choice

Twin City Manufacturing Corporation is an accrual basis taxpayer. Twin City Manufacturing provides medical insurance for its employees through a self-insured reimbursement plan. Twin City Manufacturing pays $100 per month per employee into the plan fund. The fund is then used to reimburse employees' medical expenses. During the current year, Twin City Manufacturing Corp. pays $12,000 into the fund and pays medical reimbursement claims of $10,600.
I.If Twin City Manufacturing is an accrual basis taxpayer it can deduct $12,000.
II.If Twin City Manufacturing is a cash basis taxpayer it can deduct $10,600.
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• 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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Definitions:

Mainstreaming

Placing children with disabilities in classrooms of children without disabilities. Today, most students with mild disabilities spend at least part of their school day in regular classrooms. The goals of mainstreaming include providing broader educational opportunities for students with disabilities and fostering interactions with children without disabilities.

Myopia

A common vision condition, also known as nearsightedness, where distant objects appear blurry while close objects can be seen clearly, due to the shape of the eye.

Mainstreaming

The practice of placing children with special education needs in regular classrooms for at least part of the day.

Phonological Disorder

A phonological disorder is a type of speech sound disorder characterized by patterns of error in sound use, making it difficult for speakers to be understood within their language community.