Answer the following statements true (T) or false (F)
1. A single taxpayer has adjusted gross income of $325,000 and has total itemized deductions in various categories totaling $20,000. The taxpayer discovers some additional deductions for AGI. The extra deductions can not affect his itemized deductions.
2. Generally, expenses incurred in an investment activity other than those incurred to produce rent and royalties are deductions from AGI.
3. Fees paid to prepare a taxpayer's Schedule C of the tax return (Profit or Loss from Business) are for AGI deductions.
4. A sole proprietor paid legal fees in connection with the acquisition of a building that he uses in his business. The sole proprietor can deduct the legal fees for AGI.
1. FALSE
Lowering his AGI will impact some itemized deduction categories that have ceilings or floors based on a percentage of AGI.
2. FALSE
Effective in 2018, expenses incurred in an investment activity other than rental and royalty properties are not deductible.
3. TRUE
Legal and accounting fees related to self-employment activity are deductions for AGI.
4. FALSE
All costs related to acquiring the asset and placing it in service must be capitalized into the basis of the asset.
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Indicate whether the statement is true or false
When common stock is issued at an amount greater than par value, the difference between the par value and the proceeds from the sale is recorded by
A) crediting the common stock account. B) debiting an additional paid-in capital account. C) crediting the retained earnings account. D) crediting an additional paid-in capital account.
What account appears on the post-closing trial balance?
a. income summary b. Machinery c. rent expense d. interest income
Answer the following statements true (T) or false (F)
1. As long as the same person deposits customer checks and makes the journal entry to customer accounts, there will be good internal control over cash receipts. 2. A basic procedure of internal control over cash receipts is that the deposit of the cash and the recording of the receipts into the journal should be separated. 3. When a lock-box system is used, a bank employee empties the box daily and records the deposits in the company's journal. 4. When a lock-box system is used, customers send their checks to a post office box that belongs to a bank.