Please answer the Multiple Choice questions to the best of your knowledge. This is another chance for those did not participate in previous questions. Answering any of the questions posted previously and in the future will be considered as post . 1- Toro Inc. has average gross receipts of $30 million annually. This year, Toro incurred $5 million of net business interest and has adjusted taxable income of $12 million. Toro's current deduction for business interest is: A) $1.5 million B) $3.6 million C) $5 million D) $0

2- Which of the following methods of accounting is never permissible for computing taxable income? A) Cash receipts and disbursements method B) Accrual method C) Hybrid method that combines the cash and accrual methods D) All of the above are permissible methods of accounting. 3- Which of the following business expenses always results in a difference between taxable income and book income? A) Rent expense B) Interest expense C) Client entertainment D) Salary expense

4- Which of the following statements about the cash method of accounting is false? A) Under the cash method, annual taxable income equals annual net cash inflow. B) The revenue from a sale of goods is recognized when payment is received. C) An expense is recognized when the expense is paid. D) None of the above is false. 5- a cash Pozzi Company basis business, received $16,930 cash as payment on a loan Pozzi made to a business associate two years ago. The payment consisted of a $15,000 principal payment and $1,930 interest. On receipt of the cash, Pozzi recognizes: A) No taxable income. B) $1,930 taxable income. C) $15,000 taxable income. D) $16,930 taxable income.

6- Mr. Trail engaged in a current-year transaction generating $50,000 cash but only $40,000 taxable income. If Mr. Trail's marginal tax rate is 40%, compute his after-tax cash flow from the transaction. A) $20,000 B) $24,000 C) $34,000 D) $40,000