CHAPTER 16 ACCOUNTING PERIODS AND METHODS
1. A doctor’s included medical observe could finish the final day of any month of the 12 months. a. True b. False 2. A C company that doesn't have a pure enterprise 12 months should use a calendar 12 months as its tax 12 months. a. True b. False A C corporation’s number of a tax 12 months, typically, is impartial of the tax 12 months of its principal shareholders. c. True d. False three. The DEF Partnership had three equal companions when it was fashioned. Companions D and E have been calendar 12 months taxpayers and Companion F’s tax 12 months ended on June 30th earlier than he joined the partnership. The partnership could use a calendar 12 months and accomplice F could proceed to make use of the tax 12 months ending June 30th. a. True b. False four. The tax 12 months of one of many principal companions could decide the partnership’s tax 12 months. a. True b. False 5. The Seagull Partnership has three equal companions. Companion A’s tax 12 months ends June 30th, and Companions B and C use a calendar 12 months. If the partnership makes use of the calendar 12 months to report its revenue, Companion A is permitted to defer partnership revenue earned from July by means of December 2014 till he information his tax return for his 12 months ending June 30, 2015. a. True b. False 6. Pink Company and Inexperienced Company are equal companions within the R & G Partnership. Pink Corporation’s tax 12 months ends September 30th, and Inexperienced Company is a calendar 12 months taxpayer. The best mixture deferral of revenue would happen if the partnership used a calendar 12 months for tax functions. a. True b. False 7. A CPA observe that is included earns 40% of its annual revenues within the months of March and April. Though the CPA observe is an expert providers company (PSC), it might use a fiscal 12 months ending April 30th. a. True b. False eight. The flexibility of the CPA to well timed put together a tax return is a justification for the partnership’s use of a specific tax 12 months. a. True b. False 9. In 2004, a medical physician who included his observe elected a fiscal 12 months ending September 30th. Throughout the fiscal 12 months ended September 30, 2014, he acquired a wage of $190,000. Throughout the interval from October 1, 2014 to December 31, 2014, the company paid the physician a complete wage of $60,000, and paid him $240,000 of wage within the following 9 months. The corporation’s wage deduction for the fiscal 12 months ending September 30, 2015, is restricted to $240,000. a. True b. False 10.Laura Company modified its tax year-end from July 31st to December 31st in 2014. The revenue for the interval August 1, 2014 by means of December 31, 2014 was $35,000. The company tax fee is 15% on the primary $50,000 of revenue, 25% on revenue from $50,001 to $75,000, and 34% on revenue from $75,001 to $100,000. A portion of Laura’s June – December 2014 revenue can be taxed at 34%. a. True b. False 11.In 2014, T Company modified its tax 12 months from ending every April 30th to ending every December 31st. The company earned $60,000 throughout the interval Might 1, 2014 by means of December 31, 2014. The annualized revenue for the brief 12 months is $90,000. a. True b. False 12.Snow Company started enterprise on Might 1, 2014, and elected to make use of the calendar 12 months for tax functions. Brown Company, a calendar 12 months company, offered all of its property and liquidated as of April 30, 2014. Neither Snow Company nor Brown Company should annualize their revenue for his or her 2014 returns. a. True b. False 13.Ted, a money foundation taxpayer, acquired a $150,000 bonus in 2014 when he was within the 35% marginal tax bracket. In 2015, when Ted was within the 28% marginal tax bracket, it was found that the bonus was incorrectly computed, and Ted was required to refund $40,000 to his employer. On account of the refund, Ted can scale back his 2015 tax legal responsibility by $14,000 (.35 × $40,000). a. True b. False 14.Usually, an benefit to utilizing the money methodology of accounting, as in comparison with the accrual methodology, is that underneath the money methodology revenue will not be acknowledged till it's collected, reasonably than being taxed as quickly because the taxpayer has the appropriate to accumulate the revenue. a. True b. False 15.A calendar 12 months, money foundation company started enterprise on April 1, 2014, and paid $2,400 for a 24-month legal responsibility insurance coverage coverage. An accrual foundation, calendar 12 months taxpayer additionally started enterprise on April 1, 2014, and bought a 24- month legal responsibility insurance coverage coverage. The accrual foundation taxpayer should amortize the premiums over 24 months however the money foundation taxpayer could deduct the whole premiums in 2014. a. True b. False . 16.Alice, Inc., is an S company that has been in enterprise for 5 years. Its annual gross receipts have by no means exceeded $1 million. The company operates a retail retailer and additionally owns rental property. The gross sales from the retail retailer and the rental revenue could also be reported by the money methodology, until Alice beforehand elected the accrual methodology. a. True b. False