Brad Operates a Storage Business on the Accrual Method

question 71

Multiple Choice

Brad operates a storage business on the accrual method. On July 1 Brad paid $48,000 for rent on his storage warehouse and $18,000 for insurance on the contents of the warehouse. The rent and insurance covers the next 12 months. What is Brad's deduction for the rent and insurance?

• A) $48,000 for the rent and $18,000 for the insurance.
• B) $24,000 for the rent and $18,000 for the insurance.
• C) $24,000 for the rent and $9,000 for the insurance.
• D)$48,000 for the rent and $9,000 for the insurance.
• E)None of these

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Definitions:

Preferences

Preferences refer to an individual's subjective tastes or desires, ranking goods or outcomes in order of choice or desirability in decision making or consumption.

Utility Function

Describes how different combinations of goods or outcomes are valued by an individual, helping to predict choice under uncertainty.

Income

The financial gain or revenue received by an individual or entity, typically through wages, investments, or business operations.

Prices

The amount of money expected, required, or given in exchange for goods or services.