Mike started a calendar year business on September 1st of this year by paying 12 months rent on his shop at $1,000 per month. What is the maximum amount of rent that Mike can deduct this year under each type of accounting method?
A. $12,000 under the cash method and $12,000 under the accrual method
B. $4,000 under the cash method and $12,000 under the accrual method
C. $12,000 under the cash method and $4,000 under the accrual method
D. $4,000 under the cash method and $4,000 under the accrual method
E. $4,000 under the cash method and zero under the accrual method
Answer: $12,000 under the cash method and $4,000 under the accrual method