Answered: 1. Which of the following is not…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. Which of the following is not taxable income?

a.Interest

b.Hobby income

c.Child support payments

d.Royalties

e.Dividends

2. Generally, for an activity to be treated as a trade or business, which of the following is required:

a.No more than intermittent effort toward the activity

b.Regular and continual effort designed to seek profit

c.Always generate a profit

d.Organization as a corporation or partnership

3. To be deductible as the cost of special work clothing or uniforms:

a.The clothing need not be required as a condition of the job, but must not be suitable for everyday use.

b.The clothing must be required as a condition of the job, but can also be suitable for everyday use.

c.The clothing must not be suitable for everyday use and must be required as a condition of the job.

d.Only the cost of the clothing is included; upkeep is not deductible.

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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