Reference no: EM132724375

Problem 1: Aramis is a partner in a large dental practice which uses the accruals basis. Aramis sees several patients on 30 June CIY and gives them invoices dated 30 June CIY. The payment term for the invoices is 14 days.Which of the following statements is CORRECT in relation to the derivation of fee income?

Option 1: The practice will account for the income on 30 June 2014, as this is when the services were rendered and the invoice was raised.

Option 2: The practice will account for the income on 14 July 2014, as this is when the payment is due.

Option 3: The practice will account for each invoice on the date it is paid by the customer.

Option 4: The partnership can choose to use either the cash or accruals basis to achieve the most favourable tax outcome.

Problem 1: Which of the following is NOT assessable on a receipts basis?

Option 1: Interest derived on an investment held by a major bank.

Option 2: Interest derived by an individual on a savings account.

Option 3: Services income of a sole trader.

Option 4: Income received in advance with no obligation for refund.