Practice Quiz

CompTIA PDI+ Exam Prep

Category - Enrolled Agent

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Mark is an accrual basis taxpayer. He shipped $500 worth of merchandise to Ralph on December 30, 2004. Mark sent Ralph an invoice January 2, 2005 that was payable in 30 days. Ralph mailed his check to Mark on February 2, 2005. Mark deposited the check on February 6, 2005. Mark received and reconciled his bank statement March 3, 2005. When does Mark record the $500 in income?
  1. January 2, 2005 because that is when he invoiced Ralph
  2. March 3, 2005 because that is when Mark verified that the $500 check had been accepted as a deposit
  3. December 30, 2004, the date when he shipped the merchandise to Ralph
  4. February 6, 2005 because that is when Mark deposited the check from Ralph
Explanation
Answer: C - December 30, 2004, the date when he shipped the merchandise to Ralph
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