Chapter4 tax accounting with 100% answers
50. The foundation for calculating an individual's income tax is:
A) All income earned, from any source.
B) Total income before any deductions.
C) Gross income adjusted for specific deductions.
D) Adjusted gross income minus further "below-the-line" deductions.
Answer: D) Adjusted gross income minus from AGI deductions.
56. Which of the following accurately reflects the general relationship between
different income measures?
A) Gross income is equal or greater than adjusted gross income which is
equal to or greater than taxable income
B) Adjusted gross income is equal to or greater than gross income which is
equal to or greater than taxable income.
C) Adjusted gross income is equal to or greater than taxable income which is
equal to or greater than gross income
D) Gross income is equal to or greater than taxable income which is equal or
greater than adjusted gross income. * Answer: A) Gross income ≥ adjusted
gross income ≥ taxable income
57. Which statement is correct regarding realized income?
A) Taxpayers don't have to include realized income in their gross income
unless the tax code explicitly says so.
B) Realized income comes from a transaction or exchange involving another
party.
C) Once income is realized, it can never be excluded from gross income.
D) None of the above statements are correct. * Answer: B) Realized
income requires some type of transaction or exchange with a second
party.
58. Which statement about income exclusions and deferrals is incorrect?
A) Exclusions are beneficial because that income is never taxed.
B) Interest earned from municipal bonds is excluded from gross income.
C) Deferrals are income items that are earned in one year but included in
gross income in a later year.
50. The foundation for calculating an individual's income tax is:
A) All income earned, from any source.
B) Total income before any deductions.
C) Gross income adjusted for specific deductions.
D) Adjusted gross income minus further "below-the-line" deductions.
Answer: D) Adjusted gross income minus from AGI deductions.
56. Which of the following accurately reflects the general relationship between
different income measures?
A) Gross income is equal or greater than adjusted gross income which is
equal to or greater than taxable income
B) Adjusted gross income is equal to or greater than gross income which is
equal to or greater than taxable income.
C) Adjusted gross income is equal to or greater than taxable income which is
equal to or greater than gross income
D) Gross income is equal to or greater than taxable income which is equal or
greater than adjusted gross income. * Answer: A) Gross income ≥ adjusted
gross income ≥ taxable income
57. Which statement is correct regarding realized income?
A) Taxpayers don't have to include realized income in their gross income
unless the tax code explicitly says so.
B) Realized income comes from a transaction or exchange involving another
party.
C) Once income is realized, it can never be excluded from gross income.
D) None of the above statements are correct. * Answer: B) Realized
income requires some type of transaction or exchange with a second
party.
58. Which statement about income exclusions and deferrals is incorrect?
A) Exclusions are beneficial because that income is never taxed.
B) Interest earned from municipal bonds is excluded from gross income.
C) Deferrals are income items that are earned in one year but included in
gross income in a later year.
