Question : 31. In the current year, Johnice started a profitable bookkeeping business : 1313513

31. In the current year, Johnice started a profitable bookkeeping business as a sole proprietor. Johnice made $38,000 in her first year of operation. What two forms mustJohnice file for her business?

a. Schedules A and C

b. Schedules D and E

c. Schedule SE and C

d. Schedules B and C

e. None of the above

32. Maria runs a small business out of her home. She has expenses of $2,000 per year and uses the cash basis method of accounting. Her only employee is her cousin who works for her part-time. What form should she use to report her business income?

a. Schedule A

b. Schedule C

c. Schedule F

d. Schedule C-EZ

e. Schedule B

33. Stone Pine Corporation, a calendar year taxpayer, has ending inventory of $160,000 on December 31, 2014. During the year, the corporation purchased additional inventory of $375,000. If cost of goods sold for 2014 is $470,000, what was the beginning inventory at January 1, 2014?

a. $55,000

b. $215,000

c. $255,000

d. $310,000

e. None of the above

34. Janine is a sole proprietor owning a small specialty store. The business records show that the cost of the store’s individual inventory items has been steadily increasing. The cost of the end of the year inventory is $125,000 and the cost of the beginning of the year inventory was $150,000. Janine uses the LIFO method of inventory valuation. Which of the following statements is true?

a. Janine purchased more inventory during the year than she sold during the same one-year period.

b. Janine would have a higher net income if she used the FIFO method of inventory valuation instead of the LIFO method.

c. Janine has apparently increased the volume of items in her ending inventory as compared to the number of items in her beginning inventory.

d. Since the cost of the store’s inventory items is increasing, Janine will have a smaller cost of goods sold amount on a LIFO basis than on a FIFO basis.

e. None of the above.

35. Acacia Company had inventory of $400,000 on December 31, 2014. Other information is as follows:

?

Purchases $1,500,000

Sales   1,800,000

Inventory 1/1/2014 500,000

?

What is the amount of Acacia’s cost of goods sold for 2014?

a. $200,000

b. $1,600,000

c. $1,700,000

d. $1,800,000

e. None of the above

36. Jasper owns a small retail store as a sole proprietor. The business records show that the cost of the store’s inventory items has been steadily increasing. The cost of the end of the year inventory is $200,000 and the cost of the beginning of the year inventory was $250,000. Jasper uses the FIFO method of inventory valuation. Which of the following statements is true?

a. Jasper purchased more inventory during the year than he sold during the same one-year period.

b. Jasper would have a higher net income if he used the LIFO method of inventory valuation instead of the FIFO method.

c. Jasper has apparently decreased the volume of items in his ending inventory as compared to the number of items in his beginning inventory.

d. Since the cost of the store’s inventory items is increasing, Jasper will have a greater cost of goods sold figure under FIFO than LIFO.

e. None of the above.

37. Patricia is a business owner who is trying to determine her cost of goods sold for 2014. She bought 20 units of inventory at $11, then 26 units at $10, and finally 18 units at $14. She sold 30 units at an average price of $16 per unit in 2014 and uses FIFO for her inventory valuation. What was her cost of goods sold in 2014, assuming that there was no inventory at the beginning of the year?

a. $320

b. $330

c. $480

d. $732

e. None of the above

38. Greg, a self-employed plumber, commutes from his home to his office which is 10 miles away. He loads his truck for the day with the parts that he needs. Then he is off to see his first customer of the day, Mr. Smith. Mr. Smith is 5 miles away from the office. After Mr. Smith’s job, Greg goes to his next job, Martin’s Dry Cleaning, which is 21 miles away from Mr. Smith. Greg spends the rest of the day at Martin’s Dry Cleaning. From Martin’s Dry Cleaning, Greg goes home which is now only 7 miles away. How much can Greg count as deductible transportation miles?

a. None of it

b. 21 miles

c. 26 miles

d. 43 miles

39. Deductible transportation expenses:

a. Include meals and lodging.

b. Include only costs incurred while away from home.

c. Do not include the normal costs of commuting.

d. Do not include daily expenses for transportation between the taxpayer’s home and temporary work locations if the taxpayer has a regular place of business.

40. Which of the following taxpayers may not use the standard mileage method of calculating transportation costs?

a. A self-employed CPA who drives a computer-equipped minivan to visit clients.

b. A taxpayer who has a fleet of 10 business automobiles.

c. A real estate salesperson who drives a $70,000 Mercedes while showing houses.

d. An attorney who uses his Yaris for calling on clients.

e. All of the above taxpayers may use the standard mileage method.