Bent Corporation, an accrual basis taxpayer, is owned by Ben, a cash basis taxpayer. On December...
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Bent Corporation, an accrual basis taxpayer, is owned by Ben, a cash basis taxpayer. On December 31, 2006 the corporation accrues interest revenue of $5,000 on a note to Ben which was executed on March 1, 2007. The interest is not paid until 2007. How much can Bent Corporation deduct on its 2006 tax return?
a. $0
b. $3,750
c. $4,167
d. $5,000
Accrual Basis of accounting
In the Accrual basis of accounting, revenues are recorded once the receipt has been established and expenses are recorded only they become due to be paid irrespective that whether the actual cash has been received/paid by the enterprises.
Answer and Explanation: 1
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View this answerThe correct answer is a
The interest revenue is for the year 2007 and we have to pay tax on accrued interest revenue that year only. So, no deduct...
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Accrued Expenses & Revenues: Definition & Examples
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Chapter 4 / Lesson 5
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Learn about accrued revenue. Understand the definition of accrued revenue, identify the types of accrued revenue and expenses, and see accrued revenue examples.
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