Question : Multiple Choice Questions 45.Which of the following statements not correct? A. Corporations must : 1169122

 

Multiple Choice Questions 

45.Which of the following statements is not correct?   

A. Corporations must estimate and prepay their income taxes through quarterly tax deposits.

 

B. At the end of the year, when the worksheet is prepared, the Income Tax Expense account is adjusted only if the corporation owes additional taxes.

 

C. Income Tax Expense may be shown as an operating expense on a corporation’s income statement.

 

D. On a corporate income statement, the tax effect of each extraordinary item is offset against each gain or loss to show the effect ‘net of taxes’.

 

 

 

 

46.The adjustment for the amount of future taxes to be paid as a result of the MACRS depreciation deduction taken in this and prior years is recorded with a debit to   

A. Tax Expense and a credit to Deferred Income Tax Liability.

 

B. Deferred Income Tax Liability and a credit to Tax Expense.

 

C. Tax Expense and a credit to Deferred Income Tax Asset.

 

D. Deferred Income Tax Asset and a credit to Tax Expense.

 

 

 

 

47.When the cumulative taxable income is higher than that reported on the financial statements, this gives rise to   

A. a deferred income tax liability.

 

B. a deferred income tax asset.

 

C. Either of these.

 

D. Neither of these.

 

 

 

 

48.If the corporation’s income tax computed at the end of the year is less than the total of quarterly deposits, the necessary adjustment will result in a   

A. debit to Income Tax Expense.

 

B. credit to Income Tax Payable.

 

C. debit to Income Tax Refund Receivable.

 

D. credit to Income Tax Refund Receivable.

 

 

 

 

49.The worksheet for a corporation and a sole proprietorship are almost identical. The major difference is the   

A. adjustment for accrued revenues.

 

B. adjustment for accrued expenses.

 

C. income tax adjustment.

 

D. adjustment for depreciation.

 

 

 

 

50.Which of the following statements regarding the income statements of corporations is not correct?   

A. Some corporations include cost of goods sold with the operating expenses.

 

B. Some corporations show income tax expense as an operating expense rather than as a deduction from net income before income tax.

 

C. If a gain or loss results from a transaction that is highly unusual, is clearly unrelated to routine operations, and is not expected to occur again in the near future, the gain or loss is shown as an operating expense.

 

D. Corporations can use a variety of formats for the income statement.

 

 

 

 

51.Which of the following statements is not correct?   

A. Retained earnings represents a cash fund.

 

B. A corporation can have a large cash balance but no retained earnings.

 

C. A corporation can have a balance in the Retained Earnings account but no cash.

 

D. Retained earnings represent the undistributed profits and losses of the corporation.

 

 

 

 

52.The record date is the date   

A. on which the board of directors declares the dividend.

 

B. used to determine who will receive the dividend.

 

C. on which the dividend is paid.

 

D. on which the dividend transaction is recorded in the general journal.

 

 

 

 

53.The entry to record the declaration of a cash dividend consists of a debit to   

A. Dividend Expense and a credit to Cash.

 

B. Retained Earnings and a credit to Common Stock Dividend Distributable.

 

C. Dividends Payable and a credit to Retained Earnings.

 

D. Retained Earnings and a credit to Dividends Payable.

 

 

 

 

54.A liability for the payment of cash dividends is recorded   

A. on the date the board of directors publicly declares its intention to pay the dividends.

 

B. only when cumulative preferred dividends are passed over (not paid) and are in arrears.

 

C. at the end of any year during which common stock dividends were not paid.

 

D. at the end of every year that the corporation makes a profit.