ACC 547 Final Exam MCQ

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ACC 547 Final ExamMCQ1)A family with $45,000 in assets and $22,000 of liabilities would have a net worth ofA. $67,000B. $45,000C. $22,000D. $23,0002)A budget deficit would result when a person's or family'sA. assets exceed liabilitiesB. net worth decreasesC. actual expenses are greater than planned expensesD. actual expenses are less than planned expenses3)The payment items that should be budgeted first areA. unplanned living expensesB. fixed expensesC. investment fundsD. variable expenses4)Which of the following statements regarding tax credits is true?A. None of the answer choices are correct.B. Tax credits reduce taxable incomedollar for dollar.C. Tax credits reduce taxes payable dollar for dollar.D. Tax credits provide a greater tax benefit the greater the taxpayer's marginal tax rate.5)The tax base for an individual tax return isA. adjusted gross income minus from AGI deductionsB. realized income from whatever source derivedC. adjusted gross incomeD. gross income

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6)Which of the following statements regarding exemptions is correct?A. Taxpayers subtract exemption deductions from adjusted gross income todeterminetaxable income.B. Personal exemptions are more valuable than dependency exemptions.C. Exemption amounts are considered to be for AGI deductions.D. Taxpayers filing a married filing jointly return are limited to two exemptions on their taxreturns.7)Which of the following has the lowest authoritative weight?A. Interpretive regulationB. Legislative regulationC. Revenue rulingD. Private letter ruling8)Which of the following has the highest authoritative weight?A. Tax articleB. Text bookC. Revenue rulingD. Private letter ruling9)Jaime recently found a "favorable" trial level court opinion directly on point for her taxquestion. Which trial level court would he prefer to have issued the opinion?A. Divorce CourtB. District CourtC. Tax CourtD. Circuit Court10)Sam saved diligently for his college education by putting part of his pay into U.S. SeriesEE saving bonds. Sam purchased the bonds for $6,500, and this year he redeemed the bonds

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for $7,200. He has no other income this year. What amount must Sam include in his grossincome?A. $700 unless Sam uses the proceeds to pay for his college tuition and feesB. $6,500C. $7,200D. A maximum of $350 if Sam uses the proceeds to pay for his college tuition and fees11) Jill currently lives in the suburbs andcommutes 25 miles to her office in downtownFreeport. She is considering quitting her current job to look for new employment in thedowntown. Which of the following statements best describes how Jill can satisfy the distancetest for deducting moving expenses if she accepts a new job in downtown Freeport?A. Jill cannot satisfy the distance test if she accepts a job in downtown Freeport.B. Jill must move 25 miles east from downtown Freeport.C. Jill must move at least 25 miles further away from downtown Freeport.D. Jill need not move her residence because she is starting a new job.12)Congress allows self-employed taxpayers to deduct the cost of health insurance above theline (for AGI) becauseA. health insurance premiums cannot be deducted otherwiseB. self-employed taxpayers need an alternate mechanism for reducing the cost of health careC. employers are allowed to deduct social security (FICA) taxes as a business expenseD. this deduction provides a measure of equity between employees and the self-employed13)Jim was in an auto accident this year. Jim paid $2,450 to repair his car after the accident,and his insurance only reimbursed him $400. Jim bought his car several years ago for$15,000. What casualty loss deduction from this accident can Jim combine with his othercasualty losses in computing his itemized deductions?A. $12,550B. $2,050C. $2,450

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D. $1,55014)Rhiannaand Jay are married filing jointly in 2009. They have six children for whom theymay claim the child tax credit. Their AGI was $123,440. What amount of child tax creditmay they claim on their 2009 tax return?A. $4,000B. $6,000C. $5,300D.$12,00015)Which of the following is a miscellaneous itemized deduction that is not subject to the 2percent of AGI floor?A. Tax preparation feesB. Fees for investment adviceC. Gambling losses to the extent of gambling winningsD. Employee business expenses16)Beth's business purchased only one asset during the current year. It placed in servicemachinery (7-year property) on December 1 with a basis of $50,000. Calculate the maximumdepreciation expense (ignoring Section 179 or bonus expensing):A. $10,000B. $2,500C. $1,785D. $7,14517)Bateman Corporation sold an office building that it used in its business for $800,000.Bateman bought the building ten years ago for $600,000 and has claimed $200,000 ofdepreciation expense. What is the amount and character of Bateman's gain or loss?A. $400,000 capital gain

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