ACCT 2321 Test 2 - Fall 2007 Test II Multiple Choice Multiple Choice Identify the choice that best completes the statement or answers the question

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Fall 2007, Test II, Multiple Choice Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. Alice purchased an office condominium on September 20, 2007, for $200,000. On October 10, she purchased business assets (seven-year property) for $80,000. Alice did not elect to expense any of the assets under § 179, nor did she elect straight-line cost recovery. Determine the cost recovery deduction for the business as- sets for 2007. a. $2,856. b. $25,999. c. $32,002. d. $41,428. ____ 2. On May 15, 2007, Brent purchased a truck for $40,000. The truck weighed less than 13,000 lbs. Brent used the truck in connection with his farming business. Brent does not elect to expense assets under § 179. Determ- ine the cost recovery deduction for 2007. a. $4,000. b. $6,000. c. $8,000. d. $10,000. ____ 3. During the past two years, through extensive advertising and improved customer relations, Orange Corpora- tion estimated that it had developed customer goodwill worth $500,000. For the current year, determine the amount of goodwill Orange Corporation may amortize. a. $16,667. b. $26,667. c. $33,333. d. $100,000. e. None of the above. ____ 4. Orange Corporation begins business on April 2, 2007. The corporation has start-up expenditures of $54,000. If Orange Corporation elects § 195, determine the total amount that Orange may deduct in 2007. a. $1,000. b. $2,650. c. $3,650. d. $5,000. ____ 5. Statutory employees: a. Report their expenses on Form 2106. b. Include common law employees. c. Are subject to income tax withholdings. d. Claim their expenses as deductions for AGI. e. None of the above. ____ 6. Allowing for the cutback adjustment (50% reduction for meals and entertainment), which of the following trips, if any, will qualify for the travel expense deduction? a. Dr. Jones, a general dentist, attends a two-day seminar on developing a dental practice. b. Dr. Brown, a surgeon, attends a two-day seminar on financial planning. c. Paul, a romance language high school teacher, spends summer break in France, Portugal, and Spain improving his language skills. d. Myrna went on a two-week vacation in Boston. While there, she visited her employer’s home office to have lunch with former co-workers.
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____ 7. Carolyn is single and has a college degree in finance. She is employed as a loan officer at a bank; her yearly AGI approximates $50,000. During 2006, she enrolled in a weekend MBA program and incurred the follow- ing nonreimbursed expenses: $3,900 (tuition), $300 (books), $200 (other school supplies), and $200 (trans- portation to and from campus). Disregarding the 2%-of-AGI limitation, as to the MBA program, Carolyn has a: a. Deduction for and deduction from AGI of $0.
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This note was uploaded on 03/29/2008 for the course ACCT 2321 taught by Professor Vchamb during the Spring '08 term at Texas A&M University, Corpus Christi.

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ACCT 2321 Test 2 - Fall 2007 Test II Multiple Choice Multiple Choice Identify the choice that best completes the statement or answers the question

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