An Exception to the Economic Performance Test Allows the Deduction

question 20

Multiple Choice

An exception to the economic performance test allows the deduction of year-end accruals if
I.Either the expense is not material for both tax and financial purposes or the accrual results in a better matching of revenue and expenses.
II.The taxpayer consistently treats the item as incurred in the year the all events test is met.
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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:

Yombe Pfemba

A type of sculpture produced by the Yombe people of Central Africa, often depicting motherhood and the maternal figure.

Ci Wara Ritual

The Ci Wara ritual is a ceremonial tradition among the Bamana people of Mali, involving elaborately carved antelope headdresses in agricultural ceremonies.

Antelope

A diverse group of typically horned, swift, and slender animals native to various regions in Africa and Eurasia.

Efficiency Wage

The theory that employers pay a higher wage than the market equilibrium to increase worker productivity and reduce turnover.