Which of the following advance payments cannot qualify for income tax deferral?
A) advance collection for services
B) advance collection for merchandise
C) advance collection of rent without associated services
D) advance collection of rent with associated services
C) advance collection of rent without associated services
Rent received in advance is immediately taxable assuming no services are associated with the rent.
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Dobson Company expects to begin operating on January 1. The company's master budget contained the following operating expense budget: JanuaryFebruaryMarchSalary expenses$40,000 $36,000 $36,000 Sales commissions, 5% of sales 24,000 30,000 28,000 Utilities 2,800 2,800 2,800 Depreciation on store equipment 1,800 1,800 1,800 Rent 7,200 7,200 7,200 Miscellaneous 1,800 1,800 1,800 Total operating expenses$77,600 $79,600 $77,600 Sales commissions are paid in cash in the month following the month in which the expense is recognized. All other expense items requiring cash payment are paid in the month in which they are recognized. The amount of cash to be paid for operating expenses during the month of January is:
A. $77,600. B. $51,800. C. $53,600. D. None of the choices.
The effect of a change in accounting principle that is inseparable from the effect of a change in accounting estimate should be reported
a. by showing the pro forma effects of retroactive application. b. by restating the financial statements of all prior periods presented. c. in the period of change and future periods d. as a correction of an error.
Which of the following is true about the Uniform Partnership Act (UPA)?
A) An attempted partnership agreement in a state where the UPA applies will be unenforceable. B) The UPA can be thought of as a gap-filling statute that applies only if a partnership has no partnership agreement provision on a particular point. C) A partnership agreement is generally enforceable except where its provisions differ from the UPA. D) The UPA requires that partnership agreements be in writing in order to be enforceable.
Most people prefer to receive money today rather than ten years from now because
A) U.S. prices have been falling recently and a dollar received today will buy more than one received in the future. B) Future investment returns are expected to be less variable than current ones. C) Receiving cash today enables one to take advantage of current investment opportunities. D) People are unsure about their future employment prospects and wish to provide themselves with a source of future income. E) Most people are afraid they will spend future cash payments foolishly.