ACCT 224 DeVry Week 6 Quiz Latest

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Prepaid income
Bad debts
Related party accruals
Interest on state and local bonds
(General Feedback: Chapter 6, page 144)
Question 5. Question : (TCO 9) In which of the following instance(s) is the measurement of net income for tax
purposes different for accrual basis and cash basis calendar year taxpayers?
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In December, the taxpayer signs a contract for routine legal service to be performed in December and paid
for in January of the following year.
The taxpayer's equipment is repaired in November and the bill is paid in December.
The measurement of net income is different in both of these cases.
Net income would be the same under both cash and accrual methods.
(General Feedback: Chapter 6. The concept of substantial economic performance means that the accrual basis
taxpayer cannot deduct the cost until the work is performed, unless the work is routine and paid within nine months.
The concept does not apply here.)