Today’s question: REG

Eugene and Linda O'Brien had adjusted gross income of $30,000. Additional information is available as follows for this year:

Cash contribution to church = $1,500
Tuition paid to parochial school = $1,200
Contribution to a qualified charity made by a bank credit card charge on December 14. The credit card obligation was paid in January of the next year = $250
Cash contribution to needy family = $100

What is the maximum amount of the above that they can utilize in calculating itemized deductions for this year?

A)   $1,500

B)   $1,750

C)   $2,700

D)   $3,050

Correct Answer: B

Explanation: The cash contributions to the church and qualified charity are fully deductible in this year. Payment with a credit card qualifies in the year the charge was made. Tuition to a parochial school is not deductible. A needy family is not a qualified charity and therefore, non- deductible.

Today’s question: FAR

Deecee Co. adjusted its historical cost income statement by applying specific price indexes to its depreciation expense and cost of goods sold. Deecee's adjusted income statement is prepared according to:

A)   Fair value accounting

B)   General purchasing power accounting

C)   Current cost accounting

D)   Current cost/general purchasing power accounting