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Issues in Taxation - Multiple choice questions

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1) The payment items that should be budgeted first are

A. variable expenses
B. unplanned living expenses
C. fixed expenses
D. investment funds

2) The current financial position (including net worth) of an individual or family is best presented with the use of a

A. cash flow statement
B. time value of money report
C. budget
D. balance sheet

3) A family with $45,000 in assets and $22,000 of liabilities would have a net worth of

A. $23,000
B. $67,000
C. $45,000
D. $22,000

4) Which of the following statements regarding tax credits is true?

A. Tax credits provide a greater tax benefit the greater the taxpayer's marginal tax rate.
B. None of the answer choices are correct.
C. Tax credits reduce taxable income dollar for dollar.
D. Tax credits reduce taxes payable dollar for dollar.

5) Which of the following statements is true?

A. Individuals generally report all excluded income on statements supporting their tax returns.
B. Always report annual licensing fees.
C. All income, whether realized or unrealized, is reported on the individual tax return.
D. Individuals generally report deferred income on their tax returns.

6) All of the following are for AGI deductions EXCEPT

A. rental and royalty expenses
B. charitable contributions
C. moving expenses
D. business expenses

7) Which judicial doctrine means that a court will rule consistently with its previous rulings and the rulings of higher courts with appellate jurisdiction?

A. The Goldman rule
B. Stare decisis
C. Judicial hierarchy
D. Judicial consistency

8) The regulation with the highest authoritative weight is the
A. interpretative regulation
B. legislative regulation
C. procedural regulation
D. proposed regulation

9) Jaime recently found a "favorable" trial level court opinion directly on point for her tax question. Which trial level court would he prefer to have issued the opinion?
A. District Court
B. Divorce Court
C. Tax Court
D. Circuit Court

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Solution Preview

1) The payment items that should be budgeted first are

A. variable expenses
B. unplanned living expenses
C. fixed expenses
D. investment funds

2) The current financial position (including net worth) of an individual or family is best presented with the use of a

A. cash flow statement
B. time value of money report
C. budget
D. balance sheet

3) A family with $45,000 in assets and $22,000 of liabilities would have a net worth of

A. $23,000
B. $67,000
C. $45,000
D. $22,000 ...

Solution Summary

This solution provides the correct answers to the taxation multiple choice questions listed.

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See Also This Related BrainMass Solution

8 Multiple choice questions on redemption of preference shares, reserves, issue of shares at a premium, Goodwill, debentures, collection period, rate variance, NPV, earnings per ordinary shares

Q1.A Company has decided to redeem its preference shares at a premium of
$ 0.25. The preference shares were originally issued at $ 1.15 each.

Prior to the redemption the company's Balance Sheet showed the following
$000

Ordinary shares of $1.00 1000
8% redeemable preference shares of $1.00 600
Share premium 100
Retained Profit 750
2450

How will the reserves appear in the Balance Sheet after the preference shares
Have been redeemed?

Q2 Y ltd purchases the business of J Brown by issuing $1 shares at a premium
Of $0.20. Y ltd agrees to take over J Browns assets and liabilities at the date
Of the acquisition as follows
Fixed assets $150,000
Current assets $ 75000
Creditors $ 5000
Bank loan $20,000

Goodwill is valued at $10,000

How many shares will J Brown receive from Y ltd?

A 158000 B 175000 C 200,000 D 210,000

Q3. The following data is available for XYZ plc

Issued Ordinary shares $1000,000
Nominal value per share $ 1.00
Market value per share $ 2.30
Net profit after taxation $200,000
Retained earnings % of
Net profit after 50

What is the net dividend yield?

A 4.35% B 8.7% C 10% D 20%

Q4.The table shows the capital structure of a company
$

100,000 Ordinary shares of $ 1 each 100,000

10% debentures 50,000
Reserves 100,000

It increases the debentures by $50,000 and makes a bonus issue of one share for
Every two held. It then makes a rights issue of a further 100,000 shares at $ 1.00

How will these transactions affect the Balance sheet?

Gearing reserves bank
A decrease decrease decrease
B Increase decrease decrease
C increase decrease increase
D decrease increase increase

Q5 A Company's debtors total $27000. There is a collection period of 30 days.

The budget for the coming year provides for an increased turnover of
50% with the relevant collection period being increased to 60 days.

What will the year-end debtors be?
A$ 13500 B 27000 C 40500 D 81000

Q6 The standard time for a job is set at 50 hours. The standard direct labor rate
Is $8.00 per hour? The job was completed in 65 hours at a direct lab our
Cost of $455.

What is the direct lab our rate variance?

A. $55 Adverse B $55 favorable C $65 adverse D $65 favorable

Q7 A project has the following net present values

Discount factor 30% 50%
NPV $52000 -$16000

What is the approximate internal rate of return for the project?

A 35% B 38% C 40% D 45%

Q8 A company's published profit and loss account fives the following
Information.
$Million
Operating profit $ 4000
Interest expense 200
Taxation 1150
Preference dividends 300
Ordinary dividends 1200

What is the profit figure to be used in the calculation of earnings per ordinary
Share?

A $1150 Million B $2350 million C$ 2650 Million D $ 3800 Million

(Please see attachment for full question)

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