Question: Which of the following is TRUE for both a Traditional IRA and a Roth IRA?
Answer Choices:
Shirley can add an extra $1,000 as a catch‑up contribution
Shirley’s contributions are after‑tax
Shirley will not pay taxes on withdrawals
Shirley cannot contribute if she has a 401(k)
Answer: Shirley can add an extra $1,000 as a catch‑up contribution.
Question: Other comprehensive income includes income items that bypass the income statement.
Answer Choices:
A. True
B. False
Answer: A. True
Question: ______ receive dividend distributions after the company has paid all other providers of capital their return on investment.
Answer Choices:
A. Primary shareholders
B. Preferred shareholders
C. Contributing shareholders
D. Common shareholders
Answer: D. Common shareholders
Question: Which of the following must be disclosed for available-for-sale securities?
Answer Choices:
A. amortized cost basis
B. the name of the investee and the percentage ownership
C. difference between the carrying value of the investment and the amount of underlying equity in net assets
D. market price
Answer: A. amortized cost basis
Question: _______ preferred stock shares allow the shareholder to convert his shares to common shares at a predetermined rate or exchange ratio.
Answer Choices:
A. Callable
B. Cumulative
C. Mandatorily redeemable
D. Convertible
Answer: D. Convertible
Question: Which of the following is a debt security for which management has both the positive intent and ability to hold the debt investment until all principal and interest is fully paid?
Answer Choices:
A. available-for-sale security
B. held-to-maturity security
C. trading security
D. Not enough information to classify this security.
Answer: B. held-to-maturity security
Question: U.S. GAAP specifies that if it is ‘more likely than not’ that the firm will not realize some portion of the deferred tax asset, the firm must reduce the deferred tax asset to its net realizable value. U.S. GAAP defines ‘more likely than not’ as a likelihood of slightly more than 50%.
Answer Choices:
A. True
B. False
Answer: A. True
Question: If a company has elected the fair value option, where are gains and losses resulting from adjusting these accounts to fair value reported?
Answer Choices:
A. Unrealized Gains are reported as part of Other Comprehensive Income while Unrealized losses are reported as part of Net Income.
B. Unrealized Gains and Losses are both reported as part of Other Comprehensive Income.
C. Unrealized Gains and Losses are both reported as part of Net Income.
D. Unrealized Gains are reported as part of Net Income, while Unrealized Losses are reported as part of Other Comprehensive Income.
Answer: C. Unrealized Gains and Losses are both reported as part of Net Income.
Question: Which of the following statements best describes the effective tax rate?
Answer Choices:
A. It can be calculated by dividing income tax expense by book income before taxes.
B. It is calculated as book income divided by taxable income.
C. It changes annually based on provisions from Congress.
D. It is the legally imposed rate in a given taxing jurisdiction.
Answer: A. It can be calculated by dividing income tax expense by book income before taxes.
Question: How will the company report deferred taxes on the balance sheet assuming it meets the conditions to net assets and liabilities?
Answer Choices:
A. current liability: deferred tax liability $52,000; noncurrent asset: deferred tax asset $92,000
B. current asset: deferred tax asset $124,000; noncurrent liability: deferred tax liability $144,000
C. noncurrent liability: deferred tax liability $20,000
D. current liability: deferred tax liability $72,000; noncurrent liability: deferred tax liability $92,000
Answer: C. noncurrent liability: deferred tax liability $20,000
Question: Which of the following items is an example of an expenditure?
Answer Choices:
Monthly salary
Groceries
Inheritance from a relative
Interest from an investment
Answer: Groceries
Question: Which of the following is an example of a hard credit inquiry?
Answer Choices:
Application for a credit card
Inspection by a current creditor
Insurance company credit check
Soft credit check
Answer: Application for a credit card