HRB-27 FINAL EXAM 2024/2025 WITH 100% ACCURATE ANSWERS
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Course
HRB-27
Institution
HRB-27
What income reporting form should an independent contractor sometimes receive from the person who paid him for his services? - Precise Answer Form 1099-MISC (15.6)
Schedule C, Line F asks for the accounting method used in the business.
What is the difference between the cash method and the accr...
HRB-27 FINAL EXAM 2024/2025 WITH
100% ACCURATE ANSWERS
What income reporting form should an independent contractor
sometimes receive from the person who paid him for his services? -
Precise Answer ✔✔Form 1099-MISC (15.6)
Schedule C, Line F asks for the accounting method used in the business.
What is the difference between the cash method and the accrual method
of accounting? - Precise Answer ✔✔• Under the accrual method, total
sales and total charges for services are included in income even though
payment may be received in another tax year.
• Under the cash method, only income actually received or expenses
actually paid during the year are included. (15.5)
What does it mean if a proprietor "materially participates" in the
business? - Precise Answer ✔✔He is active in running the business in a
substantial way on a day-to-day basis. (15.5)
Why is it important to know whether or not the proprietor materially
participates? - Precise Answer ✔✔If the proprietor does not materially
participate, any loss from the business is a passive loss and generally
may be currently deducted only against passive income. (15.6)
,What are returns and allowances? - Precise Answer ✔✔• Amounts that
were refunded to customers who returned merchandise for refund or
partial refund.
• These amounts are subtracted from gross receipts. (15.6)
How is cost of goods sold determined? - Precise Answer ✔✔Beginning
inventory plus purchases, plus labor, supplies, depreciation, etc.
attributable to product manufacture or preparation for sale, minus ending
inventory. (15.7)
If the client has contract labor, what should you remind the client that
they should do? - Precise Answer ✔✔• Provide a Form 1099-MISC to
any independent contractor who worked and earned $600 or more.
(15.9)
What is the purpose of self-employment tax? - Precise Answer ✔✔To
pay social security and medicare taxes. (15.14)
What amounts does a proprietor have "at risk"? - Precise Answer
✔✔Amounts invested in the business plus any business debts for which
the proprietor is personally liable. (15.16)
What difference does it make if the proprietor is "at risk" or not? -
Precise Answer ✔✔Only amounts at risk may be used to determine the
actual loss on Schedule C. (15.16)
, How does a Tax Professional meet due diligence requirements? - Precise
Answer ✔✔• Tax Professionals fulfill due diligence requirements by
making every effort to prepare accurate and complete returns.
• Tax Professionals must have knowledge of tax law, and apply a
reasonability check to the information provided by their clients. (26.1)
What is a thorough interview? - Precise Answer ✔✔A thorough
interview consists of asking general information questions, then asking
additional questions whenever information is incomplete or seems
inaccurate or inconsistent. (26.2)
What is a conflict of interest? - Precise Answer ✔✔A conflict of interest
is when one's situation might benefit at the expense of another's
situation. (26.3)
What actions can resolve a conflict of interest? - Precise Answer ✔✔A
conflict of interest is resolved when it is acknowledged, disclosed to all
parties, and the parties have consented to waiving the conflict. (26.3)
What client information is confidential? - Precise Answer ✔✔Any
information that could potentially identify the client is confidential.
Information includes (but is not limited to):
• Name
• Address and phone number
• Social security numbers
• Place of employment
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