The Constructive Receipt Doctrine

question 32

Multiple Choice

The constructive receipt doctrine:

• A) is particularly restrictive for accrual basis taxpayers
• B) causes income to be recognized before it is actually received
• C) causes income to be recognized after it is actually received
• D) applies equally to income and expenses
• E) None of these

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Definitions:

Direct Labor

Labor costs directly attributed to the production of goods or services, such as wages of workers on the assembly line.

Fixed Manufacturing Overhead

Costs associated with manufacturing that do not change with the level of production, such as salaries of supervisors and factory rent.

Raw Materials

Basic substances in their natural, modified, or semi-processed state, used as inputs for manufacturing.

Standard Cost System

A cost accounting system that uses standard costs for inventory valuation and cost control, comparing actual costs to standard costs to assess performance.