Question

The following ten key terms were listed under “Income or Loss From A Business”.

(Go to the bottom of this question for the answer sheet)

1.  Accrual Basis            

2.  Crowdfunding           

3.  Hobby Farmer          

4.  Business Income      

5.  Reserve                   

6.  Restricted Farm Loss

7. Net Business Income

8. Year ended December 31  

9. Investment Portfolio (mutual funds) 

10. Cash Basis  

The following list contains 13 potential definitions for the preceding key terms.

A.  Income that is earned through active business activity.  This would include amounts earned by producing goods, selling goods or services, or delivering services.

B.  A method of accounting for income based on cash receipts and cash disbursements.

C.  Income that is earned through active business activity.  This would include amounts earned by producing goods, selling goods or services, or selling capital assets.

D.  Funding large events with crowds in attendance in order to support specific products which the business sells.

E.  A deduction in the calculation of net business income or net taxable capital gains.

F.  The period that is covered by a taxpayer’s return.  

G.  A self-sustaining integrated set of activities and assets conducted and managed for the purpose of providing a return to investors

H. The net of inclusions less deductions, related to business income

I.   An amount of resources set aside to provide for future obligations.

J. Funding a project, venture or business by raising funds from a large number of people, usually in small amounts and usually via the internet.

K. A method of accounting for income based on recording assets when the right to receive them is established and liabilities when the obligation to pay them arises.

L. A farmer who operates a farm as a hobby but has a reasonable expectation of making a profit.

N. A part-time farmer who does not have a reasonable expectation of profit.

O. None of the above definitions apply.  (This answer can be used more than once.

Answer 1

1. Accrual Basis - K. A method of accounting for income based on recording assets when the right to receive them is established and liabilities when the obligation to pay them arises. 

2. Crowdfunding - J. Funding a project, venture or business by raising funds from a large number of people, usually in small amounts and usually via the internet.

3. Hobby Farmer - N. A part-time farmer who does not have a reasonable expectation of profit.

4. Business Income - A. Income that is earned through active business activity. This would include amounts earned by producing goods, selling goods or services, or delivering services. 5. Reserve - I. An amount of resources set aside to provide for future obligations. 6. Restricted Farm Loss - O. None of the above definitions apply. 7. Net Business Income - H. The net of inclusions less deductions, related to business income 8. Year ended December 31 - F. The period that is covered by a taxpayer’s return. 9. Investment Portfolio (mutual funds) - G. A self-sustaining integrated set of activities and assets conducted and managed for the purpose of providing a return to investors

10. Cash Basis - B. A method of accounting for income based on cash receipts and cash disbursements.

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