1) Which of the following statements regarding accounting periods is true?

a.An individual may request IRS approval to change to a fiscal year basis if certain conditions are met.

b.Almost all individuals file tax returns using a fiscal year basis.

c.Books and records may be kept on a different year-end basis than the year-end used for tax purposes.

d.The choice to file on a year-end basis must be made with an initial tax return.

2) On November 1, 2022, Dontrell entered into a lease on a building for use in his business for $1,000 per month. Under the lease terms, Dontrell pays 24 months' rent ($24,000) in advance on November 1. How much can Dontrell deduct for rent in 2022?

a.$18,000

b.$12,000

c.$24,000

d.$2,000

3)On October 1, 2022, Jeremiah entered into a lease on a building for use in his business for $1,500 per month. Under the lease terms, Jeremiah pays 12 months' rent ($27,000) in advance on December 1. How much can Jeremiah deduct for rent in 2022?

a.$13,500

b.$27,000

c.$12,000

d.$1,500

4)Which of the following reflects cash basis accounting for tax purposes?

a.Income is recognized when it is actually or constructively received, and expenses are recognized when they are actually or constructively incurred, regardless of when paid.

b.Income can be recognized either when it is earned or when it is received, and expenses are generally recognized when they are incurred.

c.Income is generally recognized when it is actually or constructively received, and expenses are generally recognized when they are paid.

d.Income is recognized when it is earned regardless of when received, and expenses are recognized when they are actually or constructively incurred.

5)Which one of the following entities cannot use the cash method for tax purposes in 2022?

a.A law firm operating as a personal service corporation with $5.4 million in average annual gross receipts

b.A small sole proprietorship with $150,000 in average annual gross receipts

c.A corporation with $28 million in average annual gross receipts and 200 employees

d.A large almond farm with $40 million in average annual gross receipts

6)Alivia sells to her father, Josiah, her shares in AA Corp for $55,000. The shares cost Alivia $80,000. How much loss may Alivia deduct from the sale?

a.$80,000

b.$55,000

c.$25,000

d.$0

7) In 2022, which of the following children would have income taxed at the parent's rates?

a.A 12-year-old child with net unearned income of $3,200

b.A 13-year-old child with salary income of $12,000

c.A nonstudent, 19-year-old child with net unearned income of $12,000

d.An 11-year-old child with salary income of $1,000

8)Which of the following types of income is subject to the kiddie tax?

a.Money earned from shoveling the neighbors' sidewalks

b.Salary for stocking shelves at a grocery store

c.Capital gains on stock sales

d.Tips received at a job waiting tables

9) A taxpayer would be required to pay FICA taxes for someone working in their home in which of the following situations?

a.A parent who earns $12,000 a year to take care of the grandchildren

b.A babysitter who earns $1,300 a year

c.A cook who is paid $35,000 a year

d.A housekeeper who is paid $8,000 a year through a cleaning service

10) The 3.8 percent Medicare tax does not apply to which of the following? a.Interest

b.Wages

c.Capital gains

d.Dividends

11) The 0.9 percent Medicare tax applies to which of the following?

a.Tax-exempt income

b.Gain on the sale of a principal residence

c.Earned income

d.IRA distributions

12) Hakeem used the information from the W-2 provided by his employer when he filed his tax return. Then he realized that he forgot to include his self-employment income. What should he do now?

a.File an amended Form 1040-X

b.File a Form 4852

c.Carry over the income to the next calendar year

d.Wait for the IRS to contact him with a correction notice

13)"Annualizing" is a method by which the taxpayer can usually decrease the amount of tax paid. True False

14) Question Content AreaMost partnerships, S corporations, and personal service corporations owned by individuals choose a September 30 year-end so that they may defer 3 months of income. True False

15) The hybrid method of accounting involves the use of both the accrual and cash methods of accounting. True False

16) In general, accrual basis taxpayers recognize income when it is earned, regardless of when it is received. True False

17) Under the cash basis of accounting, most expenses are generally deducted in the year they are paid. True False

18) All S corporations must use the accrual basis of accounting. True False

19) Accrual-based taxpayers will recognize income when received. True False

20) Salary earned by minors may be included on the parents' tax return. True False

21) In 2022, household employers are not required to pay FICA taxes on cash payments of less than $2,400 paid to any household employee in a calendar year. True False

22)For purposes of the additional 0.9 percent Medicare tax on earned income, a single taxpayer having earned income of more than $200,000 is generally subject to the tax. True False

23) There is a Medicare tax of 3.8 percent on the net investment income of high-income taxpayers. True False

24) Generally, cash basis taxpayers must deduct payments of prepaid interest using the accrual method. True False

25) If the net unearned income of a minor child is to be taxed at the parent's tax rates, the parent may elect, under certain conditions, to include the child's gross income on question Content Areathe parent's tax return. True False