ACCT 224 DeVry Week 6 Quiz Latest

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ACCT 224 DeVry Week 6 Quiz Latest

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ACCT 224 DeVry Week 6 Quiz Latest

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ACCT 224 DeVry Week 6 Quiz Latest

(TCO 9) Which of the following is NOT a realization event for tax purposes?

  • Chad found $500 in the street.
  • Justin traded a baseball card worth $100 for stock certificates.
  • John sold his a bond worth $10,000.
  • Jacob sold 100 shares of Google stock.

(General Feedback: Chapter 6, page 129. Realization occurs when the earnings process for goods and services is complete, regardless of when payment is received.)

 

Question 2. Question : (TCO 9) In which of these cases is the realization principle applied differently for tax purposes if the taxpayer is cash basis rather than accrual basis?

  • The taxpayer receives January salary income in December. The taxpayer pays January’s water bill in December.
  • There is no difference in the application of the realization principle in these cases.
  • The realization principle does not apply to cash basis taxpayers.

(General Feedback: Chapter 6 Pages 126 and 136. Cash and accrual taxpayers follow the same rule for prepaid income, but not for prepaid expenses. )

 

Question 3. Question : (TCO 9) A company that measures their taxable income from April 1 through March 31 every year has what type of taxable year?

  • Calendar year
  • Fiscal year
  • Temporary year
  • None of the above are correct

(General Feedback: Chapter 6, page 119)

 

Question 4. Question : (TCO 9) What is a permanent source of a book/tax difference?

  • Prepaid income
  • Bad debts
  • Related party accruals
  • Interest on state and local bonds

(General Feedback: Chapter 6, page 144)

 

Question 5. Question : (TCO 9) In which of the following instance(s) is the measurement of net income for tax purposes different for accrual basis and cash basis calendar year taxpayers?

  • In December, the taxpayer signs a contract for routine legal service to be performed in December and paid for in January of the following year.
  • The taxpayer’s equipment is repaired in November and the bill is paid in December.
  • The measurement of net income is different in both of these cases.
  • Net income would be the same under both cash and accrual methods.

(General Feedback: Chapter 6. The concept of substantial economic performance means that the accrual basis taxpayer cannot deduct the cost until the work is performed, unless the work is routine and paid within nine months. The concept does not apply here.)