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IRS Enrolled Agent Unit 2 TEST
Questions and Answers 100% Pass
1. Which of the following date ranges would be a permissible fiscal tax year?
A. January 1, 2016 to December 31, 2016
B. February 2, 2016 to February 2, 2017
C. July 1, 2016 to June 30, 2017
D. May 1, 2016 to May 31, 2017 - ✔✔c
2. All of the following costs must be included in inventory except:
A. The cost of hipping raw materials to the seller's factory.
B The cost of shipping a finished product to a customer.
C Raw material .
D. Direct labor costs. - ✔✔B
3. Which of the following changes in accounting method does not require prior approval from the IRS?
A. A change from FIFO to LIFO inventory valuation.
B. A change from the cash method to the accrual method.
C. A er 1nge in the overall method of figuring depreciation.
D. A correction of a math error in depreciating an asset. - ✔✔D
Emily Charlene © 2025, All Rights Reserved.
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4. Which of the following entities can use the cash method of accounting?
A. A family farming corporation with average gross receipts of $22 million.
B. A C corporation with average gross receipts of $50 million.
C. A tax shelter with average gross receipts of $50,000.
D. A corporation with long-term contracts and average gross receipts of $900,000. - ✔✔A
5. Which would not be considered the end of an acceptable tax year?
A. January 31
B. Apnl 15
C. December 31
D. The last Friday in February. - ✔✔B
6. Which of the following entities cannot use the cash method of accounting?
A. A partnership that produces inventory for sale to customers and has $1.2 million of average annual
gross
receipts.
B. A C corporation without inventory that has $4.5 million of average annual gross ret:e1pts
C. A qualified family farming corporation with $24 million of average annual gross receipts.
D. A sole proprietor with inventory and $500,000 of average annual gross receipts. - ✔✔A
7. Under the lower of cost or market method of valuing inventory, what is the value of the inventory as a
whole,
based on the table below?
Emily Charlene © 2025, All Rights Reserved.
IRS Enrolled Agent Unit 2 TEST
Questions and Answers 100% Pass
1. Which of the following date ranges would be a permissible fiscal tax year?
A. January 1, 2016 to December 31, 2016
B. February 2, 2016 to February 2, 2017
C. July 1, 2016 to June 30, 2017
D. May 1, 2016 to May 31, 2017 - ✔✔c
2. All of the following costs must be included in inventory except:
A. The cost of hipping raw materials to the seller's factory.
B The cost of shipping a finished product to a customer.
C Raw material .
D. Direct labor costs. - ✔✔B
3. Which of the following changes in accounting method does not require prior approval from the IRS?
A. A change from FIFO to LIFO inventory valuation.
B. A change from the cash method to the accrual method.
C. A er 1nge in the overall method of figuring depreciation.
D. A correction of a math error in depreciating an asset. - ✔✔D
Emily Charlene © 2025, All Rights Reserved.
, 2|Page
4. Which of the following entities can use the cash method of accounting?
A. A family farming corporation with average gross receipts of $22 million.
B. A C corporation with average gross receipts of $50 million.
C. A tax shelter with average gross receipts of $50,000.
D. A corporation with long-term contracts and average gross receipts of $900,000. - ✔✔A
5. Which would not be considered the end of an acceptable tax year?
A. January 31
B. Apnl 15
C. December 31
D. The last Friday in February. - ✔✔B
6. Which of the following entities cannot use the cash method of accounting?
A. A partnership that produces inventory for sale to customers and has $1.2 million of average annual
gross
receipts.
B. A C corporation without inventory that has $4.5 million of average annual gross ret:e1pts
C. A qualified family farming corporation with $24 million of average annual gross receipts.
D. A sole proprietor with inventory and $500,000 of average annual gross receipts. - ✔✔A
7. Under the lower of cost or market method of valuing inventory, what is the value of the inventory as a
whole,
based on the table below?
Emily Charlene © 2025, All Rights Reserved.
