The Green Company, an Accrual Basis Taxpayer, Provides Business-Consulting Services

question 109

Multiple Choice

The Green Company, an accrual basis taxpayer, provides business-consulting services. Clients generally pay a retainer at the beginning of a 12-month period. This entitles the client to no more than 40 hours of services. Once the client has received 40 hours of services, Green charges $500 per hour. Green Company allocates the retainer to income based on the number of hours worked on the contract. At the end of the tax year, the company had $50,000 of unearned revenues from these contracts. The company also had $10,000 in unearned rent income received from excess office space leased to other companies. Based on the above, Green must include in gross income for the current year:

• A)$60,000.
• B)$50,000.
• C)$10,000.
• D)$0.
• E)None of these.

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Definitions:

Behavior and Mental Processes

Aspects of psychology that pertain to observable actions (behavior) and internal experiences such as thoughts and emotions (mental processes).

Stability and Change

The concept of how certain aspects of physical, cognitive, social, and emotional development remain stable over time, whereas others change.

Developmental Psychologists

Professionals who study the psychological growth and development that occurs throughout a lifespan.

Nature And Nurture

The debate regarding the influence of genetic inheritance (nature) versus environmental factors (nurture) on human development.