Accounting Exam Questions

Question 1
Not yet answered
Points out of 3.00
Flag question Question text
The Snella Company reports 2015 Pre-tax Net Income of $10,000. The following items exist: The tax rate is 20%. Indicate the amounts for 2015 Income Tax Expense and 12/31/15 Income Tax
Payable, respectively:
Select one:
a. $2,040, $2,034
b. $1,960, $1,934
c. $1,960, $1,986
d. $2,040, $1,986
e. $2,034, $2,034 Question 2
Not yet answered
Points out of 3.00
Flag question Question text
Kensington had this info at the end of 2015, its first year of operations: No other permanent or temporary differences exist. The accrued expense will be paid in 2018; the
depreciation will reverse evenly over the next three years. Tax rate is 30%. Future net income is probable.
The 12/31/15 Income Tax Payable is:
Select one:
a. $60,000
b. $240,000
c. $210,000
d. $180,000
e. $360,000 Question 3
Not yet answered
Points out of 3.00
Flag question Question text
The lessee includes the present value of the salvage value in the cost of the leased equipment
Select one:
a. Only if it is guaranteed
b. Only if it is not guaranteed
c. Only if it is guaranteed and the lessee is aware of the lessor's interest rate
d. Only if it is not guaranteed and the lessee is not aware of the lessor's interest rate Question 4
Not yet answered
Points out of 3.00
Flag question Question text Indicate the type of Deferred Tax account created by Accrued Expenses and Prepaid Expenses,
respectively:
Select one:
a. Liability, Asset
b. Asset, Liability
c. Liability, Liability
d. Asset, Asset Question 5
Not yet answered
Points out of 3.00
Flag question Question text
Which of the following requires interperiod tax allocation?
Select one:
a. Discontinued Operations Loss
b. Municipal bond interest revenue
c. The use of similar depreciation computations for both book and tax purposes.
d. Probable, estimable contingent losses. Question 6
Not yet answered
Points out of 3.00
Flag question Question text
Which of the following differences would result in future taxable amounts (DTLs)?
Select one:
a. Expenses or losses that are deductible before they are recognized in financial income. b. Revenue or gains that are taxable before they are recognized in financial income
c. Expenses or losses that are deductible after they are recognized in financial income
d. Revenues or gains that are recognized in financial income but are never recognized as revenue or gain
for tax purposes
e. Expenses or losses that are deducted from financial income but never deductible for tax purposes Question 7
Not yet answered
Points out of 3.00
Flag question Question text
In its 2016 income statement, Tow Inc. reported proceeds from an officer's life insurance policy of $90,000
and depreciation of $250,000. Tow was the owner and beneficiary of the life insurance on its officer. Tow
deducted depreciation of $370,000 in its 2016 income tax return when the tax rate was 40%. Data related
to the reversal of the excess tax deduction for depreciation follow: There are no other temporary differences. Taxable Income in 2016 is $67,500. Tow expects to report
profits (rather than losses) for tax purposes for all future years. What is 2016 Income Tax Expense?
Select one:
a. $12,000
b. $39,000
c. $75,000
d. $66,000
e. $33,000 Question 8
Not yet answered
Points out of 3.00 Flag question Question text
At December 31, 20X4, Bren Co. had the following deferred income tax items: Which of the following should Bren report as the noncurrent item(s) on its December 31, 20X4 balance
sheet?
Select one:
a. $12,000 Net Liability
b. $4,000 Net Liability
c. $7,000 Net Liability
d. $7,000 Net Asset
e. $3,000 Net Asset Question 9
Not yet answered
Points out of 3.00
Flag question Question text
The Palms company records a Deferred Tax Asset; it is likely that the DTA will not be realized due to
doubtful future incomes. Palms properly records an Allowance account. Recording the allowance will
increase
Select one:
a. Income Tax Expense
b. Income Tax Payable
c. Deferred Tax Liability d. Benefit due to Loss Carry forward Question 10
Not yet answered
Points out of 3.00
Flag question Question text
Given the following for the XYZ Company: Assume XYZ elects the carryback provision in 2017 and that future income is not "more likely than not."
Reported 2017 Net Loss is:
Select one:
a. $16,400
b. $15,000
c. $16,000
d. $4,000
e. $20,000 Question 11
Not yet answered
Points out of 3.00
Flag question Question text Lease X contains a bargain purchase option, but the lease term is equal to 70% of the estimated
economic life of the leased property. Lease Y does not transfer ownership of the property to the lessee at
the end of the lease term, but the present value of the lease payments is equal to 75% of the fair value of
the leased property. How should the lessee classify Lease X and Lease Y, respectively?
Select one:
a. Operating Lease, Capital Lease
b. Operating Lease, Operating Lease
c. Capital Lease, Capital Lease
d. Capital Lease, Operating Lease Question 12
Not yet answered
Points out of 3.00
Flag question Question text
Given the following for the QRS Company: QRS elected the carryback provision in 2017. Future income is probable. The 2018 Net Income is:
Select one:
a. $2,400
b. $2,000
c. $9,600
d. $8,000
e. $16,000 Question 13
Not yet answered
Points out of 3.00 Flag question Question text
The Herbertson Company leases machines to clients. Annual rentals are paid each year, with the first
payment due on the day the lease begins. A machine with a book value of $10,000 is leased. Guaranteed
salvage value is $1,000. Lease term is five years. Herbertson's interest rate is 5%. What is the annual
lease payment?
Select one:
a. $2,261.33
b. $2,027.40
c. $2,199.76
d. $2,128.77
e. $1,979.78 Question 14
Not yet answered
Points out of 3.00
Flag question Question text
Skor Co. leased equipment to Douglas Corp. on January 2, 2011 for an 8-year period expiring December
31, 2018. Equal payments under the lease are $600,000 and are due on January 2 of each year. The first
payment was made on January 2, 2011. The cost of the equipment is $2,800,000. The lease is
appropriately accounted for as a sales-type lease. The present value of the lease payments is
$3,300,000. What amount of net profit on the sale should Skor report for the year ended December 31,
2011?
Select one:
a. $720,000
b. $500,000
c. $90,000
d. $600,000 e. $2,800,000

Question 15
Not yet answered
Points out of 3.00
Flag question Question text
On January 1, 2018, Penn Corp. signed an eight-year noncancelable lease for certain machinery. The
terms of the lease called for Penn to make annual payments of $100,000 at the beginning of each year
for eight years. Penn properly accounted for this lease transaction as a capital lease. The lease payments
were determined to have a present value of $586,842 at an effective interest rate of 10%.
Interest expense to be recorded in 2018 will be:
Select one:
a. $51,316
b. $10,000
c. $466,507
d. $48,684
e. $58,684