In the current year, Fitz, a single taxpayer, sustained a $48,000 loss on Code Sec. 1244 stock in JJJ Corp., a qualifying small business corporation, and a $20,000 loss on Code Sec. 1244 stock in MMM Corp., another qualifying small business corporation. What is the maximum amount of loss that Fitz can deduct for the current year?
(A)$50,000 capital loss
(B)$68,000 capital loss
(C)$18,000 ordinary loss and $50,000 capital loss
(D)$50,000 ordinary loss and $18,000 capital loss
Three key words used to describe the ethical responsibilities of accountants are:
(A)CPA's, GAAP, AICPA (B)Competence, objectivity, and confidentiality (C)Reliability, integrity, and honesty (D)Integrity, intelligence, and reliability (E)Secrecy, intelligence, and reliability
Correct Answer: B
GAAP refers to: Mark one answer:
(A)General accounting assistance program (B)Generally accepted accounting principles (C)Generally acceptable account procedures (D)The theory that accounting and the general public look at financial statements differently
Correct Answer: B
If Jenny's Bakery purchased an insurance policy, assuming the accrual accounting method is still being used, when would the company report the cost of the policy as an expense?
(A)When Jenny signs the policy (B)When payment is made (C)When the bakery receives the benefits of the policy (D)When the bakery receives payments from the insurance company (E)When the invoice is received
Correct Answer: C
More CPA Exam Questions
- 1Common stock has a _____ balance and is a/an _____ to the Corporation.
- 2When capital is increased in the double-entry method of accounting, the result is: Mark one answer:
- 3Bart’s Brewskies has grown beyond its wildest dreams. They are now a corporation and have hired an accountant. Their income statement is now showing a net income. How is this income shown on the Statement of Retained Earnings? (I) It increases retained earnings.(I). It is shown as dividends paid to shareholders.(I)I. It does not impact the Statement of Retained Earnings. Mark one answer:
- 4Cartman's Cats had a total of 100,000 shares of common stock issued. In February, they reacquired 20,000 shares and did not retire them. How many shares of outstanding stock do they currently have? Mark one answer:
- 5Jenny's Bakery recently delivered a bad batch of cakes to a local restaurant. Jenny quickly refunded the cost of the cakes to the restaurant. Her accountant made a _____ to her Refunds of Sales account for this transaction: