Pre Exam Quiz 2. Business - Accounting And Taxation

1

Mason, a physically handicapped individual, pays $10,000 this year for the installation of wheelchair ramps, support bars, and railings in his personal residence. These improvements increase the value of his personal residence by $2,000 . Only $8,000 of the expenditure qualifies as a medical expense for tax purposes

2

Objectivity means that financial information is supported by independent, unbiased evidence; it demands more than a person's opinion.

3

Refer to the information above. Assuming that Beech Soda uses the LIFO cost flow assumption, the cost of goods sold to be recorded at January 14 is:

4

Dalton Company uses the estimate based on analysis of receivables to account for uncollectible accounts. The company has determined that the Irish Company account is uncollectible. To write-off this account, Dalton should debit

5

The term "consolidated" is used in financial statements under U.S. GAAP to refer to the financial reporting for a parent and its subsidiaries. The equivalent term used on balance sheets in the United Kingdom is:

6

A budget that shows expected costs at more than one level of activity is called a(n) ________ budget.

7

Customer response time comprises of ________

8

A company has net income of $375,000, net sales of $8,200,000, and average total assets of $4,162,500. Its return on total assets equals:

9

The Adjusting Journal Entry numbering system

10

Which of the following procedures for detecting unrecorded transactions at the client's December 31 year-end is least likely to result in discovery of an unrecorded year-end account payable?

11

Retained earnings represent the earnings of the corporation that have not been distributed as dividends to stockholders.

12

Under the Federal Personal Responsibility and Work Opportunity Reconciliation Act, every employer is required to report the name, address, and social security number of each new employee to the appropriate state agency

13

If a company failed to make the end-of-period adjustment to move the amount of management fees that were earned from the Unearned Management Fees account to the Management Fees Revenue account, this omission would cause:

14

The Jimenez Company accepted an interest-bearing note to settle a past-due account originating from a sale of merchandise. When the note is collected, the interest earned should be credited to

15

Which of the following guidelines is correct?

16

Which of the following is the primary criterion for revenue recognition applied in practice?

17

On May 31 of the current year, the assets and liabilities of Riser, Inc. are as follows: Cash $20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300. What is the amount of owner's equity as of May 31 of the current year?

18

The management functions of planning, control, and decision making all are facilitated by an understanding of cost-volume-profit relationships.

19

In the U.S., Generally Accepted Accounting Principles (GAAP) are established by the:

20

Answer the following statements true (T) or false (F)

in Business

1. To claim the Lifetime Learning Credit, a student must take at least one-half of a full-time course load during the year.
2. The qualified retirement savings contributions credit is based on a maximum contribution of $2,000.
3. Shafiq, age 16, works part-time at the local supermarket after school and on vacations. He plans to open a Roth IRA to save for his future. Shafiq makes less than $10,000 per year. He can take advantage of the qualified retirement savings contributions credit ("saver's credit").
4. In lieu of a foreign tax credit, a taxpayer may elect to take a deduction for foreign taxes paid or accrued.
5. The foreign tax credit is equal to the smaller of foreign taxes paid or accrued in the tax year or the portion of the U.S. income tax liability attributable to the income earned in all foreign countries.

21

The lower of cost and net realizable value method for inventory was developed to:

22

Refer to the information above. What is the total of Hunter Products' liabilities at the end of May?

23

Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $1050. Fragmental collected the entire $8400 cash on October 1 and recorded it as unearned revenue. Assuming adjusting entries are only made at year-end, the adjusting entry made by Fragmental Co. on December 31 would be:

24

S corporations are not entitled to a dividends received deduction.

25

A business distributes land to one of its owners. The business purchased the land a few years ago for $15,000, but it is now worth $35,000. Compare the treatment of this distribution when made by a partnership as opposed to an S corporation. Consider the impact on the business and the partner/shareholder and the determination of basis in the property.

26

Use the following to answer the question(s) below:On January 1, 2021, Hobart Mfg. Co. purchased a drill press at a cost of $36,000. The drill press is expected to last 10 years and has a residual value of $6,000. During its 10-year life, the equipment is expected to produce 500,000 units of product. In 2021 and 2022, 25,000 and 84,000 units, respectively, were produced. Required:Compute depreciation for 2021 and 2022 and the book value of the drill press at December 31, 2021 and December 31, 2022, assuming the straight-line method is used.

27

Amortization of bond discount and premiums would be additions or subtractions from net income in the ___________________________ section of the statement of cash flows

28

Similar to an S corporation shareholder's stock basis, the AAA may not have a negative balance.

29

In some countries, financial accounting and tax accounting are so closely related that there is very little need to account for deferred income taxes. Which of the following countries has a financial accounting system that is most different from its tax laws?

30

What is the primary purpose of the Balanced Scorecard?

31

When a retailing business is making estimates for the expected customer refunds and allowances, it decreases the customer refunds payable account:

32

Pfizer was investigated by the SEC for violating the Foreign Corrupt Practices Act (FCPA) because it allegedly:

33

Sales plus Sales Returns and Allowances minus Sales Discounts equals Net Sales on the income statement

34

What is meant by the net realizable value for accounts receivable?

Cost	$36,000
Less: Residual value	6,000
Depreciable base	$30,000
Estimated life (years)	÷ 10
Annual depreciation	$ 3,000

Year	Cost	Deprec.	Accum. Deprec.	Dec. 31 Book Value
2021	$36,000	$3,000	$3,000	$33,000
2022	36,000	3,000	6,000	30,000

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Pre Exam Quiz 2. Business - Accounting And Taxation

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