Question

Walter owns and operates a shop that sells stationery. During 2019, he used $4,000 of his...

Walter owns and operates a shop that sells stationery. During 2019, he used $4,000 of his inventory for his personal use. How much of that $4,000 may Walter deduct directly from the gross income of the business?

$0

$1,000

$2,000

$4,000

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Answer #1

Good which are used for personal use from the Inventory of the business are to be debited to the capital account of the owner and is to be reduced from the inventory. Such goods used for personal use are not business expense and therefore they are not directly deducted from the gross income. however they are not directly directly from the gross income but because of reduction in inventory it reduces the owner's equity.

Therefore no amount is to be deducted directly from the gross income.

So the correct option is 1st .

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