CBA CBA Tax Planning & Accounting Fundamentals 3

Question 1

A Qualified Opportunity Zone (QOZ) investment allows taxpayers to defer and potentially reduce capital gains taxes by investing realized gains into:

Accepted Answer

A Qualified Opportunity Fund within 180 days of the gain

Answer

Investing capital gains into a Qualified Opportunity Fund within 180 days defers the original tax and can reduce it, with gains from the QOF investment potentially excluded if held 10+ years.

Question 2

For a business with irregular cash flow, which budgeting method is most appropriate because it resets and justifies every expense from zero each period?

Accepted Answer

Zero-based budgeting

Answer

Zero-based budgeting requires every expense to be justified from scratch each period, eliminating the assumption that prior-year spending levels are appropriate, which is valuable for businesses with variable cash flows.

Question 3

The 'qualified business income' (QBI) deduction under Section 199A primarily benefits owners of:

Accepted Answer

Pass-through entities such as S corporations, partnerships, and sole proprietorships

Answer

Section 199A allows eligible pass-through business owners to deduct up to 20% of qualified business income, reducing their effective tax rate closer to the corporate rate.

Question 4

Which financial statement reports a company's assets, liabilities, and stockholders' equity at a specific point in time?

Accepted Answer

Balance sheet

Answer

The balance sheet presents a snapshot of the business's financial position on a specific date, showing what the company owns (assets), owes (liabilities), and the residual equity (net worth).

Question 5

A business advisor reviewing a client's accounts receivable aging report would be most concerned about invoices classified as:

Accepted Answer

Over 90 days outstanding

Answer

Invoices over 90 days are the most concerning because the probability of collection drops significantly with age, and these balances may require write-offs that impact reported income.

(CBA) Certified Business Advisor Practice Test

(CBA) Certified Business Advisor Practice Test

CBA CBA Tax Planning & Accounting Fundamentals 3