In 2017,Dargo Inc.,a calendar year corporation,accrued a $75,000 year-end bonus payable to its CEO.Dargo and the CEO are not related parties.Dargo paid the bonus to the CEO on February 8,2018.Dargo can deduct the bonus in 2017.

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Quizplus · Accepted Answer

According to the accrual method of accounting, expenses are recognized when incurred, regardless of when they are paid. In this case, Dargo Inc. accrued the bonus payable to its CEO in 2017, so it can deduct it in 2017, even if it is paid in 2018. Therefore, the statement is true.