FP II Unit 5 5.01/02/03

While reviewing the general ledger of a business, a virtual auditor identified two identical journal entries within the same accounting period. What reasoning technique did the virtual auditor use?

• comparative

• contextual

• cross source

• symbolic

Why would a business use comparative-reasoning processes to ensure that its financial data are in compliance

• to review surrounding or historical data

• to track information in relation to time

• to identify similar transactions

• to boost data storage systems

Compliance in the finance industry involves financial institutions operating within:

• specific territories.

• organizational plans.

• regulatory guidelines.

• different relationships

Rhondi paid a tax that was included in the price of his new Porsche. This ad valorem tax is called a/an:

• gift tax

• sales tax

• excise tax

• luxury tax

What does the term "qualified dividend" mean in reference to capital gains tax?

• It is a designation to tell the broker that an investor is a higher risk

• It is entitled to an increased return based on government-approved terms.

• It is a more expensive class of dividends that are offered by some larger companies

• It is an ordinary dividend that meets specific criteria, to be taxed at a lower long-term capital gains tax rate.

Six months ago, Xander bought 500 shares of stock at $25 per share. Today, he sold all 500 shares for $48 per share. What type of tax is Xander obligated to pay as a result of this financial transaction?

• capital gains tax

• luxury tax

• excise tax

• sales tax

Upon the death of his uncle, Erik was told he would have to pay taxes on the car his uncle left to him. The uncle’s wife was free from paying taxes on the items left to her. Why

• Upon the death of his uncle, Erik was told he would have to pay taxes on the car his uncle left to him. The uncle’s wife was free from paying taxes on the items left to her. Why

• Estate taxes only apply to heirs and not living spouses.

• Spouses do not have to pay capital gains taxes in cases of death.

• The car is more than ten years old and is not considered an asset.

Karlie received the gift of a car from her cousin Jayla for much less than the actual value. Who, as required by law, pays the gift tax on the car?

• Jayla pays the gift tax.

• Karlie pays the gift tax.

• The car is a tax-exempt gift.

• They split the tax payment evenly.

Shik has an investment that bears interest that is free from federal or state income tax. This investment is considered:

• tax-exempt.

• tax-deferred.

• a value stock.

• a discretionary tax.

The government decides to pass a new law requiring certain standards of air cleanliness be met. They will levy a tax on production of automobiles that produce gas emissions above a certain limit. However, they provide ta

• rent seeking.

• hidden costs

• direct controls.

• transfer payments.