In the Case of a Partnership Whose Partners All Use

question 29

Multiple Choice

In the case of a partnership whose partners all use a calendar year,a reason that is acceptable to the IRS for using a tax year ending June 30th would be:

• A)The accountant is already overburdened with calendar year tax returns and could not timely file the partnership's return.
• B)A December 31st inventory would be required if a calendar year was used,and the employees do not want to work on New Year's Eve.
• C)The company's income does not fluctuate a great deal from year to year.
• D)The business has a natural business year that ends June 30th.
• E)None of the above.

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Definitions:

LIFO

"Last In, First Out," an inventory valuation method where the most recently produced or purchased items are recorded as sold first, affecting cost of goods sold and inventory value.

FIFO Inventory Method

An accounting method for valuing inventory that assumes the first items purchased are the first to be sold.

Cost Of Goods Sold

The total cost directly associated with producing goods that have been sold, including materials and labor.

Days' Sales

Often part of larger financial metrics, this term by itself is unclear without additional context such as Days' Sales Outstanding (DSO).