Which one of the following regarding the basis for mutual funds is false ? The b

Question

Which one of the following regarding the basis for mutual funds is false ? The basis of mutual funds can be determined by using the:    Double category method Average basis Specific share identification method First in first out method Which one of the following regarding the basis for mutual funds is false ? The basis of mutual funds can be determined by using the:    Double category method Average basis Specific share identification method First in first out method Which one of the following regarding the basis for mutual funds is false ? The basis of mutual funds can be determined by using the:    Double category method Average basis Specific share identification method First in first out method Which one of the following regarding the basis for mutual funds is false ? The basis of mutual funds can be determined by using the:    Double category method Average basis Specific share identification method First in first out method Double category method Average basis Specific share identification method First in first out method Average basis Specific share identification method First in first out method

Explanation / Answer

The false statement is: The basis of mutual funds can be determined by using the:   

Double category method

The basis for mutual funds can be computed using the average basis which is also allowed by IRS. IRS also allows specific identification where the cost of shares are specifically identified and the FIFO method where the assumption is the first shares purchased are the ones sold out first.

The double category method is not allowed by IRS. Under this shares are divided based upon how long they have been owned.

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