An Exception to the Economic Performance Test Allows the Deduction

Multiple Choice

An exception to the economic performance test allows the deduction of year-end accruals if
I.Either the expense is not material for both tax and financial purposes or the accrual results in a better matching of revenue and expenses.
II.The taxpayer consistently treats the item as incurred in the year the all events test is met.
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A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements are correct.
D) Neither statement is correct.