Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

Dan has an adjusted gross income (AGI) of $50,000 and paid the following taxes during the tax year: $2,000 in state income taxes, $1,500 in property taxes, $500 in federal income taxes, and $300 in sales taxes. Which of the following amounts can Dan deduct as an itemized deduction for taxes paid on his federal income tax return?

$4,300

$500

$2,000

$3,500

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Verified step by step guidance

Step 1: Understand the concept of itemized deductions for taxes paid. The IRS allows taxpayers to deduct certain taxes paid, such as state income taxes, property taxes, and sales taxes, but federal income taxes are not deductible.

Step 2: Identify the taxes paid by Dan that are eligible for deduction. From the problem, Dan paid $2,000 in state income taxes, $1,500 in property taxes, and $300 in sales taxes. These are eligible for deduction.

Step 3: Exclude the federal income taxes paid. The $500 paid in federal income taxes is not deductible, as per IRS rules.

Step 4: Add the eligible amounts together to calculate the total deductible amount. Use the formula: $ \text{Total Deductible Taxes} = \text{State Income Taxes} + \text{Property Taxes} + \text{Sales Taxes} $.

Step 5: Substitute the values into the formula: $ \text{Total Deductible Taxes} = 2000 + 1500 + 300 $. This will give the total amount Dan can deduct as an itemized deduction.