Section A: Attempt All Questions 1. The after-tax cost of a dollar of meal and entertainmeat expense is 80 cents for a taxpayer with a 40% marginal tax rate. TRUE or FALSE 2. Poole Services, a calendar year taxpayer, billed a client for $1,675 of services on November 30,2015 , and received a check in full payment from the client on January 12, 2016. If Poole is a cash basis taxpayer, it reports $1,675 taxable income in 2015. TRUE or FALSE 3. Bolton Inc., a calendar year taxpayer, generated a $296,400 net operating loss this year. Bolton can carry the loss back five years and forward 20 years for tax purposes. TRUE or FALSE 4. Which of the following statements about methods of accounting is false A. The IRS has the right to determine if a taxpayer's method of accounting clearly reflects the taxpayer's income. B. A taxpayer must request permission from the IRS to change its method of accounting for tax purposes. C. A taxpayer engaged in more than one business can use a different method of accounting for each business. D. Taxpayers must use the same method of accounting to compute taxable income as they use to compute financial statement income 5. Pozzi Company, a cash basis business, received $16,930 cash as payment on a loan Pozz made to a business associate two years ago. The payment consisted of a $15,000 princip payment and $1,930 interest. On receipt of the cash, Pozzi recognize A. No taxable income. B. $1,930 taxable income. C. $15,000 taxable income. D. $16,930 taxable income