ACC 124 - Test 2

Question 1

“Trade or Business”

Answer 1

Goal- To make a profit

Question 2

3 Tests for Deductibility

Answer 2

1- Ordinary and Necessary
2- Business Purpose Test
3- Reasonable

Question 3

Expense

Answer 3

1- Inventory

Question 4

Inventory

Answer 4

• Figure out Costs of Goods Sold (COGS)

- Figure out Ending Inventory using LIFO or FIFO

Question 5

Cost of Goods Sold

Answer 5

Beginning Inventory

plus: Purchases
less: (Ending Inventory)