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.
The controller of a small utility company has interviewed audit firms proposing to perform the annual audit of their employee benefit plan. According to the guidelines of the Department of Labor (DOL), the selected auditor must be
(A)The firm that proposes the lowest fee for the work required. (B)Independent for purposes of examining financial information required to be filed annually with the DOL. (C)Included on the list of firms approved by the DOL. (D)Independent of the utility company and NOT relying on its services.
Correct Answer: B
What is the difference between a balance sheet and a trial balance? Mark one answer:
(A)A trial balance does not show profit, a balance sheet does. (B)A trial balance is used at month end and a balance sheet at year end. (C)A trial balance is used to determine profit, a balance sheet to determine net assets. (D)A trial balance is used to close accounts, a balance sheet to open accounts. (E)A trial balance is an internal document, a balance sheet is an external document.
Correct Answer: E
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
More CPA Exam Questions
- 1Bart’s Brewskies has grown beyond its wildest dreams. They are now a corporation and have hired an accountant. Their income statement is now showing a net income. How is this income shown on the Statement of Retained Earnings? (I) It increases retained earnings.(I). It is shown as dividends paid to shareholders.(I)I. It does not impact the Statement of Retained Earnings. Mark one answer:
- 2Jim's Jeans is being sued by a former employee for $100,000. The employee is claiming age discrimination. She is twenty-four and was terminated when Jim decided that he wanted all employees to be over the age of sixty-five. Jim's attorney has told him that the employee has a strong case and will probably win. How does this impact Jim's accounting records? Mark one answer:
- 3Which of the following transactions have a negative impact on cash? Mark one answer:
- 4Which one of the following would constitute a highly inflationary economy when determining the functional currency of a foreign entity?
- 5GAAP refers to: Mark one answer: