Due to a shortage of cash, East Coast Entertainment Company, an accrual basis taxpayer, could not pay its November 2018 utility bill on time. In February of 2019, East Coast Entertainment pays the utility bill.
I.East Coast can deduct the expense on either its 2018 or 2019 tax return.
II.East Coast cannot deduct the utility expense in 2018 because it is paid in 2019.

Question

Due to a shortage of cash, East Coast Entertainment Company, an accrual basis taxpayer, could not pay its November 2018 utility bill on time. In February of 2019, East Coast Entertainment pays the utility bill.
I.East Coast can deduct the expense on either its 2018 or 2019 tax return.
II.East Coast cannot deduct the utility expense in 2018 because it is paid in 2019.
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Quizplus · Accepted Answer

The Answer of Due to a shortage of cash, East Coast Entertainment Company, an accrual basis taxpayer, could not pay its November 2018 utility bill on time. In February of 2019, East Coast Entertainment pays the utility bill.
I.East Coast can deduct the expense on either its 2018 or 2019 tax return.
II.East Coast cannot deduct the utility expense in 2018 because it is paid in 2019.
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Due to a Shortage of Cash, East Coast Entertainment Company