Which of the Following Payments Received on December 31, 2018

question 84

Multiple Choice

Which of the following payments received on December 31, 2018, would be recognized by a cash basis taxpayer in 2018, but would not be recognized in 2018 by an accrual basis taxpayer?
I.Checks received from customers for services rendered during November and December 2018. The checks are deposited in the bank account on January 4, 2019.
II.Checks received from customers for services to be rendered during 2019. The checks are received in the morning mail and deposited in the bank account on December 31, 2018.
III.A check received from a customer for a service contract. The services under the contract are to be rendered over 24 months, beginning in January 2019. The check is deposited in the bank account on January 4, 2018.
​

• A)Only statement I is correct.
• B)Only statements I and II are correct
• C)Only statement III is correct.
• D)Only statements II and III are correct.
• E)Only statement II is correct.

---

Definitions:

Alimentary Canal

The digestive tube extending from the mouth to the anus, through which food is ingested, digested, absorbed, and waste material expelled.

Amylase

An enzyme that catalyzes the hydrolysis of starch into sugars, found in the saliva and pancreatic fluid of humans.

Starch

A carbohydrate consisting of a large number of glucose units, serving as a major energy source from food.

Gallbladder

A small organ located under the liver, which stores and concentrates bile, a digestive enzyme produced by the liver.