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What is the difference between a balance sheet and a trial balance? Mark one answer:

(A)A trial balance does not show profit, a balance sheet does.

(B)A trial balance is used at month end and a balance sheet at year end.

(C)A trial balance is used to determine profit, a balance sheet to determine net assets.

(D)A trial balance is used to close accounts, a balance sheet to open accounts.

(E)A trial balance is an internal document, a balance sheet is an external document.

The Correct Answer

Jenny'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:

(A)note (B)debit (C)credit (D)cost adjustment (E)deposit

Correct Answer: B

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

Correct Answer: D

King, CPA, was engaged to audit the financial statements of Newton Company after its fiscal year had ended. King neither observed the inventory count nor confirmed the receivables by direct communication with debtors, but was satisfied concerning both after applying alternative procedures.King’s auditor’s report most likely contained a(n)

(A)Qualified opinion (B)Disclaimer of opinion. (C)Unmodified opinion. (D)Unmodified opinion with an other-matter paragraph.

Correct Answer: C

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