Chapter 4 Quiz - 1 Marks: 1/1 Because financial accounting...

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1 Marks: 1/1 Because financial accounting and tax accounting both employ the realization principle, taxable income will always equal accounting income as computed under generally accepted accounting principles. Choose one answer. a. True b. False Correct. Both the financial accounting system and the tax accounting system employ the realization principle, but there are other differences between the two systems which have different objectives. Question 2 Marks: 1/1 The Blue Utilities Company paid Sue $1,500 for the right to lay an underground electric cable across her property anytime in the future. Choose one answer. a. Sue must recognize $1,500 gross income in the current year if the company did not install the cable during b. Sue must recognize $1,500 gross income in the current year regardless of whether the company installed year. c. Sue must recognize $1,500 gross income in the current year, and when the cable is installed she must red the land by $1,500. d. Sue is not required to recognize gross income from the receipt of the funds, but she must reduce her cost $1,500. 1 Marks: 0/1 Judy is a cash basis attorney. In 2009, she performed services in connection with the formation of a corporation and received stock with a value of $3,000 for her services. By the end of the year, the value of the stock had increased to $12,000. She continued to hold the stock. Judy must recognize $12,000 of gross income from the stock for 2009. Choose one answer. a. True Incorrect. b. False 2 Marks: 0/1 For purposes of determining gross income, which of the following is true? Choose one answer. a. A taxpayer who finds a wallet full of money is not required to recognize income because someone will eve return of the money. b. A mechanic completed repairs on an automobile during the year and collects money from the customer. T satisfied with the repairs and sued the mechanic for a refund. The mechanic can defer recognition of the inco been settled. c. Embezzlement proceeds are not included in the embezzler's gross income because the embezzler has an o owner. d. All of the above are true. e. None of the above is true. 1 Marks: 0/1 Taxable income and financial accounting income should always be the same because the goals of the Federal income tax system and financial accounting are the same.
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Choose one answer. a. True Incorrect. b. False The principal goal of the Federal income tax system is to raise revenues in an equitable manner, whereas the goal of financial accounting is to present information to investors and potential investors to assist them in their decisions. pp. 4-4 and 4-5 2 Marks: 0/1 Albert is in the 30 percent marginal tax bracket. On a particular Saturday, he had planned to paint a room in his house, but his employer requested that he work that day. Because Albert had to work, it was necessary for him to hire a painter. By working and hiring a painter, Albert will: Choose one answer.
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This note was uploaded on 04/03/2011 for the course ACC 3400 taught by Professor Balden during the Spring '11 term at Utah Valley University.

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Chapter 4 Quiz - 1 Marks: 1/1 Because financial accounting...

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