When the IRS Requires a Taxpayer to Change Accounting Methods

question 54

Multiple Choice

When the IRS requires a taxpayer to change accounting methods:

• A) The taxpayer may be subject to penalties and interest.
• B) The taxpayer generally is required to make the change as of the beginning of the earliest open year.
• C) The adjustments due to the change cannot be spread over subsequent years.
• D) Only a. and b. are correct.
• E) a., b., and c. are correct.

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Definitions:

Farmer

An individual engaged in the act of agriculture, raising living organisms for food or raw materials.

Short-Run Supply

The supply of goods that occurs within a timeframe where at least one factor of production is fixed.

Perfectly Competitive

A market structure characterized by a large number of small firms, identical products, and ease of entry and exit.

MC Curve

The graph that shows the relationship between the marginal cost of producing each additional unit and the quantity produced.