The Cohan rule has to do with:1) Tax accounting methods2) Debts of another taxpayer3) Substantiation of deductions4) Cash method of accountingNonbusiness bad debts are deductible:1) as short-term capital losses.2) in full against business gross income.3) only when they become wholly or partially worthless.4) a and c are both correct.

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The Cohan rule has to do with: 1) Tax accounting methods 2) Debts of another taxpayer 3) Substantiation of deductions O4) Cash method of accounting

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter6: Business Expenses

Section: Chapter Questions

Problem 9DQ

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Question

The Cohan rule has to do with:
1) Tax accounting methods
2) Debts of another taxpayer
3) Substantiation of deductions
4) Cash method of accounting
Nonbusiness bad debts are deductible:
1) as short-term capital losses.
2) in full against business gross income.
3) only when they become wholly or partially worthless.
4) a and c are both correct.

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Which of the following statements is false? In order to claim a bad debt deduction: a. There must be an existing debt. b. The debt must be written-off. c. The taxpayer must be in the business of money-lending. d. The debt must be bad.
The allowance method of accounting for bad debts. follows which principle? a) Matching b) Revenue recognition c) Going concern d) Historical cost
Which of the following statements accurately describes the impact of accounting for bad debts on taxes? A) Accounting for bad debts increases taxable income in the period they are recognized. B) Accounting for bad debts decreases taxable income in the period they are recognized. C Accounting for bad debts has no impact on taxable income. D) Accounting for bad debts defers taxable income to future periods.
Which of the following relationships best describes the percentage of receivables basis of valuing accounts receivable? O A. Matching, emphasis on statement of financial position relationships. O B. Matching, emphasis on income statement relationships. Oc. Cash realizable value, emphasis on statement of financial position relationships. O D. Cash realizable value emphasis on income statement relationships.
Answer to below Question
Sub: Financial Accounting
Which of the following would not overstate current-period net income?a. Capitalizing an expenditure that should be expensed.b. Failing to record a liability as an expense.c. Failing to record a check paying an item in Vouchers Payable.d. All of the above would overstate net income.
What is the theoretical justification of the allowancemethod as contrasted with the direct write-off methodof accounting for bad debts?
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Distinguish the difference between Bad Debts and Provision for Doubtful Debts, indicating the accounting treatment given to an increase/decrease in the Provision for Doubtful Debts and the impacts generally on Income Statements and Statements of Financial Statements.
Choose the right one
A disadvantage of basing bad debt expense on the historical relationship between actual bad debts and the outstanding accounts receivable balance at the end of the year is that A it is not a generally accepted accounting procedure. B it is an income statement approach. C it may not recognize the cause and effect relationship between expenses and revenues. D it may not result in a reasonable estimate of the net realizable value of receivables.