IRS Enrolled Agent Unit 2 TEST Exam Questions and Answers
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Course
EA - Enrolled Agent
Institution
EA - Enrolled Agent
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 - Answer-c
2. All of the following costs must be included in inven...
IRS Enrolled Agent Unit 2 TEST Exam
Questions and Answers
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 - Answer-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. - Answer-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. - Answer-D
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. -
Answer-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. - Answer-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. -
Answer-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?
Cost Market
$200 $500
$300 $200
$225 $150
$725 $850
A. $725
B.$850
C. $750
D.$550 - Answer-D
8. Helen is the owner of Banner Custom Sofas, a calendar year, accrual-basis S
corporation. She sells five sofas to
Sonny's Interior Design on December 21, 2016, and bills Sonny's for $2,500 on that
date. Sonny's pays the invoice
in full on January 15, 2017. Banner would include this income in:
A.2015
B.2016
C.2017
D. None of the above. - Answer-B
9. Vargas Cellular Corporation, a C corporation, was organized on April l, 2016. It
elected the calendar year as its
tax year. When is the first tax return due for Vargas Cellular for this short tax year?
A. April 18, 2017
B. April 15, 2016
C. March 15, 2018
D. May 15, 2017 - Answer-A
10. Which of the following activities would make a taxpayer subject to the uniform
capitalization (UNICAP) rules? - A. An individual taxpayer who produces items as a
hobby and occasionally sells them at a profit.
B. A taxpayer who produces property for sale to wholesale retailers.
c. A t axpayer who acquires land and holds it for investment.
D. A freelance artist who carries an inventory of artwork valued at $1.2 million. -
Answer-B
11 Ray operates a retail clothing store using the accrual method and reports Income on
schedule C, Net Profit or
Loss from Business. He also runs a lawn care service that he operates only in the
summer months. Which of the
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