Todd Operates a Business Using the Cash Basis of Accounting

question 7

Multiple Choice

Todd operates a business using the cash basis of accounting. At the end of last year, Todd was granted permission to switch his sales on account to the accrual method. Last year Todd made $420,000 of sales on account and $64,000 was uncollected at the end of the year. What is the Todd's §481 adjustment for this year?

• A) increase income by $420,000
• B) increase income by $16,000
• C) increase expenses by $64,000
• D) increase expenses by $420,000
• E) Todd has no §481 adjustment this year.

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Definitions:

Lesbian Woman

A woman who is emotionally, romantically, and/or sexually attracted to other women.

Same-Sex Partners

Individuals who are involved in a romantic or sexual relationship with someone of the same sex.

Sexual Identity

One’s self-label or self-identification as a heterosexual, or LGBTQ person.

Role Flexibility

The ability to adapt to different roles or functions in varying situations, often seen as a vital skill in workplaces and personal relationships.