Question 1

Under UNICAP,all of the following overhead costs are included in inventory except

Accepted Answer

A) factory utilities,rent,insurance and depreciation. 
B) officers' salaries related to production and factory administration. 
C) research and experimentation. 
D) All of the above are included in inventory under UNICAP. 
A) factory utilities,rent,insurance and depreciation. 
B) officers' salaries related to production and factory administration. 
C) research and experimentation. 
D) All of the above are included in inventory under UNICAP.

Question 2

In 2019,Richard's Department Store changes its inventory method from FIFO to LIFO.Richard's uses the simplified LIFO method.Richard's year-end inventory under FIFO is as follows: 2018 - $300,000; 2019 - $350,000.The 2018 price index is 110% and the 2019 index is 120%.The 2019 ending inventory after adopting the LIFO method is

Accepted Answer

A) $350,000. 
B) $320,833. 
C) $381,818. 
D) $322,727. 
A) $350,000. 
B) $320,833. 
C) $381,818. 
D) $322,727.

Question 3

Chana made a $75,000 interest-free loan to her son,Trey,who used the money to retire a mortgage on his personal residence.Trey's only source of income was salary of $50,000 and $940 interest income on a savings account.The relevant Federal interest rate was 5% and the loan was outstanding all year long.What amount must Chana include as interest income as a result of this transaction?

Accepted Answer

A) $3,750 
B) $940 
C) $2,810 
D) $0 
A) $3,750 
B) $940 
C) $2,810 
D) $0

Question 4

Which of the following companies whose business involves long-term contracts will be eligible to use the completed contract method?

Accepted Answer

A) a home construction company averaging $30 million in gross revenues each year 
B) A small specialized historic renovation company whose projects typically last three years.Revenues average $20 million per year. 
C) only companies whose contract price is collected upon completion of the contract 
D) all of the above 
A) a home construction company averaging $30 million in gross revenues each year 
B) A small specialized historic renovation company whose projects typically last three years.Revenues average $20 million per year. 
C) only companies whose contract price is collected upon completion of the contract 
D) all of the above

Question 5

Look-back interest may be required on long-term contracts if actual total costs had been employed in determining gross profit rather than estimated costs in earlier years of the contract.The interest will not be assessed if

Accepted Answer

A) the completed contract method is used. 
B) the contract is completed within two years of the commencement date. 
C) the contract price is less than $1 million. 
D) All of the above are correct. 
A) the completed contract method is used. 
B) the contract is completed within two years of the commencement date. 
C) the contract price is less than $1 million. 
D) All of the above are correct.

Question 6

The installment sale method may be used on the sale of property at a loss.

Accepted Answer

A) True 
 B)False

Question 7

A taxpayer receives permission for a voluntary change in accounting method,resulting in a negative adjustment to income.The taxpayer would like to recognize the full negative adjustment in the current year in order to maximize tax savings and time value of money.In order to recognize the full adjustment this year,the adjustment must not exceed

Accepted Answer

A) $25,000. 
B) $10,000. 
C) $3,000. 
D) Adjustments must be spread over a period of two to four years. 
A) $25,000. 
B) $10,000. 
C) $3,000. 
D) Adjustments must be spread over a period of two to four years.

Question 8

In year 1 a contractor agrees to build a building for $2,500,000 by the end of year 2.The builder's cost is estimated to be $1,800,000.The actual costs year 1 are $900,000 and year 2's actual costs are $1,100,000.Under the percentage of completion method year 2's gross profit is

Accepted Answer

A) $150,000. 
B) $500,000. 
C) $700,000. 
D) $350,000. 
A) $150,000. 
B) $500,000. 
C) $700,000. 
D) $350,000.

Question 9

Freida is an accrual-basis taxpayer who owns a furniture store.The furniture store had the following sales of inventory: $$\begin{array} { | c | c | r | r | } 
\hline \text { Year of sale } & \text { Installment sales } & \text { Gross Profit } & \text { Collections in } 2019 \
\hline 2017 & \$ 60,000 & \$ 30,000 & \$ 20,000 \
\hline 2018 & 100,000 & 50,000 & 30,000 \
\hline 2019 & 250,000 & 125,000 & 40,000 \
\hline
\end{array}$$ For tax purposes,Freida should report gross profit for 2019 of

Accepted Answer

A) $40,000. 
B) $65,000. 
C) $90,000. 
D) $125,000. 
A) $40,000. 
B) $65,000. 
C) $90,000. 
D) $125,000.

Under UNICAP,all of the following overhead costs are included in inventory except

Which of the following companies whose business involves long-term contracts will be eligible to use the completed contract method?

Look-back interest may be required on long-term contracts if actual total costs had been employed in determining gross profit rather than estimated costs in earlier years of the contract.The interest will not be assessed if

The installment sale method may be used on the sale of property at a loss.

In year 1 a contractor agrees to build a building for $2,500,000 by the end of year 2.The builder's cost is estimated to be $1,800,000.The actual costs year 1 are $900,000 and year 2's actual costs are $1,100,000.Under the percentage of completion method year 2's gross profit is

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Exam 27: Accounting Periods and Methods

Under UNICAP,all of the following overhead costs are included in inventory except

Which of the following companies whose business involves long-term contracts will be eligible to use the completed contract method?

Look-back interest may be required on long-term contracts if actual total costs had been employed in determining gross profit rather than estimated costs in earlier years of the contract.The interest will not be assessed if

The installment sale method may be used on the sale of property at a loss.

In year 1 a contractor agrees to build a building for $2,500,000 by the end of year 2.The builder's cost is estimated to be $1,800,000.The actual costs year 1 are $900,000 and year 2's actual costs are $1,100,000.Under the percentage of completion method year 2's gross profit is

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

U.S. Taxation of Foreign-Related Transactions

an Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Business Expenses and Deferred Compensation

Itemized Deductions

Losses and Bad Debts

Depreciation,cost Recovery,amortization,and Depletion

Property Transactions: Nontaxable Exchanges

Property Transactions: Sec1231 and Recapture

Special Tax Computation Methods,tax Credits,and Payment of Tax

Tax Research

Corporations

Partnerships and S Corporations

Taxes and Investment Planning

Filters