On January 1,2013,an accrual basis taxpayer entered into a contract to provide termite inspection service each month for 36 months.The amount received for the contract was $2,400.The taxpayer should report $1,600 of income in 2014.

Question

Quizplus · Accepted Answer

The taxpayer should recognize income as it is earned. In 2013, they would recognize $800 (for 12 months), and in 2014, they would recognize $800 (for 12 months), totaling $1,600 by the end of 2014.

On January 1,2013,an Accrual Basis Taxpayer Entered into a Contract