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

Answer to below Question

Sub: Financial Accounting

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.

Which accounting concept supports recording bad debt expense before accounts are actually uncollectible? a) Full disclosure principle b) Materiality concept c) Going concern concept d) Matching principle

Which of the following statements about Loss Contingencies is TRUE?  According to the practice of accounting conservatism, contingency losses do not have to be accrued until they are confirmed, while contingency gains have to be recorded when the event confirming their receipt is probable. Remote Losses do not require disclosure. According to the U.S. GAAP, a loss contingency must be accrued by a charge to income if any of the two conditions is met: 1) it is probable that an asset has been impaired, or a liability has been incurred at the date of the financial statements; 2) the amount of the loss can be reasonably estimated. If a loss is probable but cannot be estimated, it shall not be disclosed in the financial statements.

What distinguishes constructive obligations from legal obligations in accounting? a) They arise from established patterns of past practice b) They only exist in written contracts c) They never require recording d) They apply only to tax liabilities

1. Allowable deductions generally refer to amounts that are subtracted directly from one's total tax liability. 2. Deductions which constitute bribe, kickback, and other similar payment made to an official or employee of the national, local or foreign government or similar entities, being against law and public policy are not deductible from gross income. A= 1st statement is true, second statement is false. B= 1st statement is false, second statement is true. C= Both statements are false. D- Both statement are true. O A OD OB O C