With Respect to Income from Services, Which of the Following

question 117

Multiple Choice

With respect to income from services, which of the following is true?

• A) The income is always amortized over the period the services will be rendered by an accrual basis taxpayer.
• B) A cash basis taxpayer can spread the income from a 24-month service contract over the contract period.
• C) If an accrual basis taxpayer sells a 36-month service contract on July 1, 2018 for $3,600, the taxpayer's 2018 gross income from the contract is $600.
• D) If an accrual basis taxpayer sells a 24-month service contract on July 1, 2018, one-half (12/24) the income is recognized in 2019.
• E) None of these.

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Definitions:

Herfindahl Index

A measure of market concentration, calculated as the sum of the squares of the market shares of all firms within the industry.

Market Power

The ability of a firm or group of firms to manipulate the price or quantity of goods and services in the market, typically by restricting supply to influence prices to their advantage.

Industry

The organized economic activity related to the production, processing, and marketing of goods and services.

Interindustry Competition

Competition among firms that operate in different industries but compete for the same set of customers or inputs.