ExamView - Chapter 6 Tax Exam Online Questions

ExamView - Chapter 6 Tax Exam Online Questions - Name: _...

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Name: ________________________ Class: ___________________ Date: __________ ID: A 1 Acct 4013 Chapter 6 Exam Fall 2010 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. Saul is single, under age 65, and has gross income of $50,000. His deductible expenses are as follows: Alimony $12,000 Charitable contributions 2,000 Contribution to a traditional IRA 5,000 Expenses paid on rental property 6,000 Interest on home mortgage and property taxes on personal residence 7,000 State income tax 2,200 What is Saul’s AGI? a. $15,800. b. $27,000. c. $32,000. d. $33,000. e. None of the above. ____ 2. Agnes is the sole shareholder of Violet, Inc. For 2010, she receives from Violet a salary of $200,000 and dividends of $100,000. Violet’s taxable income for 2010 is $500,000. On audit, the IRS treats $50,000 of Agnes’s salary as unreasonable. Which of the following statements is correct? a. Agnes’s gross income will increase by $50,000 as a result of the IRS adjustment. b. Violet’s taxable income will not be affected by the IRS adjustment. c. Agnes’s gross income will decrease by $50,000 as a result of the IRS adjustment. d. Violet’s taxable income will increase by $50,000 as a result of the IRS adjustment. e. None of the above is correct. ____ 3. Benita incurred a business expense on December 10, 2010, which she charged on her bank credit card. She paid the credit card statement which included the charge on January 5, 2011. Which of the following is correct? a. If Benita is a cash method taxpayer, she cannot deduct the expense until 2011. b. If Benita is an accrual method taxpayer, she can deduct the expense in 2010. c. If Benita uses the accrual method, she can choose to deduct the expense in either 2010 or 2011. d. Only b. and c. are correct. e. a., b., and c. are correct.
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ID: A 2 ____ 4. Swan, Inc. is an accrual basis taxpayer. Swan uses the aging approach to calculate the reserve for bad debts. During 2010, the following occur associated with bad debts. Credit sales $300,000 Collections on credit sales 280,000 Amount added to the reserve 12,000 Beginning balance in the reserve –0– Identifiable bad debts during 2010 10,000 The amount of the deduction for bad debt expense for Swan for 2010 is: a. $10,000. b. $12,000. c. $20,000. d. $22,000. e. None of the above. ____ 5. Rex, a cash basis calendar year taxpayer, runs a bingo operation which is illegal under state law. During 2010, a bill designated H.R. 9 is introduced into the state legislature which, if enacted, would legitimize bingo games. In 2010, Rex had the following expenses: Operating expenses in conducting bingo games $247,000 Payoff money to state and local police 24,000 Newspaper ads supporting H.R. 9 3,000 Political contributions to legislators who support H.R. 9 8,000 Of these expenditures, Rex may deduct: a. $247,000. b.
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ExamView - Chapter 6 Tax Exam Online Questions - Name: _...

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