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Kaplan University AC 507 Unit 2 Quiz




Question;1. All of the following are part of the tax research process except: (Points: 1) Establish the facts Locate relevant authority Identify the issues Communicate the findings All are part of the tax research process2. CK Corporation can invest $100,000 in a project. After taxes, the project is expected to generate $40,000 of net income the first year and $75,000 of net income the second year. If the company uses a 10 percent discount rate to evaluate projects, what is the project's net cash flow? (Points: 1) $15,000 $1,690 ($1,690) ($1,315)3. Changing which of the following factors as indicated would decrease the after-tax net cash flow of a project: (Points: 1) Delaying the years in which inflows occur Delaying revenue recognition Increasing the discount rate All decrease cash flows None decrease cash flows4. What effect does an increased discount rate have on project evaluations? (Points: 1) Increases net cash flow Decreases net cash flow Increases the probability that a project will be accepted It has no effect on project evaluation5. Which of the following does not deal with a CPA's standard of conduct (Points: 1) Treasury Circular 230 AICPA Code of Conduct Internal Revenue Service Manual Statement of Standards for Tax Services6. Which of the following explain why it is important to determine the period in which income is recognized? (Points: 1) Marginal tax rates may be different in different periods. Tax laws may change The time value of money All of the above are explanations a. and b. only are explanations7. All of the following are allowable tax years except: (Points: 1) The last Friday of July December 31 The Sunday closest to March 1 August 318. All of the following are acceptable methods of accounting for revenue and expenses for tax purposes except: (Points: 1) Cash method Accrual method Percentage-of-completion Hybrid method All are acceptable methods9. Which of the following is an application of the wherewithal-to-pay concept? (Points: 1) Percentage-of-completion Hybrid method of accounting Installment method Accrual method of accounting10. Windjammer Corporation, a cash-basis, calendar-year corporation sold $30,000 of merchandise to Jackpot Company in January, year 1. In November, Jackpot declared bankruptcy without paying Windjammer. In year 4, Jackpot had reorganized under a new owner and paid all its old debts including the $30,000 owed Windjammer. How does Windjammer treat these events? (Points: 1) Recognize $30,000 revenue in year 1 only. Recognize $30,000 revenue in year 4 only. Deduct $30,000 as a bad debt in year 1. Deduct $30,000 as a bad debt in year 1, recognize $30,000 income in year 4.


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