ACC 129 Ch 6 Review Quiz

Which of the following are included in gross receipts for a Schedule C trade or business?

• Direct sales to customers

• Work performed for other businesses as an independent contractor

• Amounts reported to the taxpayer on a Form W-2 as a “statutory employee”

• All of the above

When is the cash method of accounting for Cost of Goods Sold applicable?

• When gross receipts are less than $29 million

• When inventory is not a material income-producing factor

• Both A and B

According to the Supreme Court, for an expense to be considered "ordinary," it must be:

• Unusual or unique to the taxpayer's business

• Customary or usual in the taxpayer's particular business

• Excessive in amount

• Incurred once in a lifetime

Which of the following is an example of a nondeductible expense?

• Legal bribes

• Illegal bribes, kickbacks, and other payments

• Ordinary advertising expenses

• Necessary travel expenses

What is the depreciation allowance also commonly known as?

• Cost recovery

• Asset reduction

• Value adjustment

• Expense allocation

What does the term "Adjusted Basis" refer to in depreciable basis calculation?

• The cost basis plus accumulated depreciation

• The cost basis minus accumulated depreciation

• The market value of the asset

• The book value of the asset in financial accounting

Which recovery period is typically associated with personal property according to the Depreciation Periods (Class Lives of Assets)?

• 27.5-year recovery period

• 39-year recovery period

• 3, 5, 7-year recovery periods

• 50-year recovery period

What is the MACRS recovery period for racehorses less than two years old?

• 3-year

• 5-year

• 7-year

• 10-year

Which of the following assets is included in the 7-year recovery period under MACRS?

• Farm Buildings

• Furniture, Fixtures, and Equipment

• Residential Real Property

• Autos and Light Trucks

Under the Half-Year Convention, how much depreciation is taken in the year an asset is purchased?

• No depreciation is taken

• Full-year depreciation is taken

• Half-year depreciation is taken

• Quarter-year depreciation is taken