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Nala Inc. reported deferred tax assets and deferred tax liabilities at the end of 20X4 and at the end of 20X5. Acording to FASB 109, for the year ended 20X5, Nala should report deferred income tax expense or benefit equal to the

(A)Sum of the net changes in deferred tax assets and deferred tax liabilities.

(B)Decrease in the deferred tax assets.

(C)Increase in the deferred tax liabilities.

(D)Amount of income tax liability, plus the sum of the net changes in deferred tax assets and deferred tax liabilities.

In AICPA professional standards, the word should indicates an (a)

(A)Interpretive suggestion that does not constitute a professional requirement. (B)Unconditional requirement with which the auditor is obligated to comply. (C)Presumptively mandatory requirement from which the CPA may depart in rare circumstances. (D)Recommendation that has no authoritative status.

Correct Answer: C

Cartman's Cats shows the following balances:(C)sh: $20,000(A)counts Receivable: $60,000(I)ventory: $80,000(A)counts Payable: $60,000 Wages Payable : $60,000 What is the quick ratio for the business? Mark one answer:

(A)0.2 : 1 (B)0.4 : 1 (C)0.7 : 1 (D)0.8 : 1 (E)0.6 : 1

Correct Answer: C

If an exempt organization is a corporation, the tax on unrelated business taxable income is

(A)Computed at corporate income tax rates. (B)Computed at rates applicable to trusts. (C)Credited against the tax on recognized capital gains. (D)Abated.

Correct Answer: A