CBA CBA Tax Planning & Accounting Fundamentals

Question 1

Which accounting method records revenues and expenses when they are earned or incurred, regardless of when cash is exchanged?

Accepted Answer

Accrual basis accounting

Answer

Cash basis accounting

Answer

Modified cash basis accounting

Answer

Installment basis accounting

Question 2

A C corporation is subject to 'double taxation' because:

Accepted Answer

Profits are taxed at the corporate level and again when distributed as dividends to shareholders

Answer

It pays taxes in both the state and federal jurisdictions

Answer

It files two separate federal tax returns each year

Answer

It is taxed on gross revenue rather than net income

Question 3

For federal income tax purposes, an S corporation is best described as a:

Accepted Answer

Pass-through entity where income is taxed only at the shareholder level

Answer

Standard corporation taxed at the 21% flat corporate rate

Answer

Partnership with unlimited liability for all members

Answer

Nonprofit entity exempt from all federal taxes

Question 4

The Section 179 deduction allows businesses to:

Accepted Answer

Immediately expense the full cost of qualifying business assets rather than depreciating them over time

Answer

Deduct home office expenses for remote employees

Answer

Defer capital gains on the sale of business property

Answer

Exclude up to $250,000 of gain from the sale of a principal residence

Question 5

Which financial statement shows a company's revenues, expenses, and net income or loss over a specific period?

Accepted Answer

Income statement

Answer

Balance sheet

Answer

Statement of cash flows

Answer

Statement of retained earnings

Question 6

Self-employment tax paid by a sole proprietor covers contributions to which two federal programs?

Accepted Answer

Social Security and Medicare

Answer

Medicare and Medicaid

Answer

Social Security and Unemployment Insurance

Answer

Medicare and Federal Disability Insurance