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Enrolled Agent Exam Prep - Part 2 Questions and Answers
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Enrolled Agent Exam Prep - Part 2Questions and Answers
Which iform iof ibusiness ientity iis inot ia ilegal ientity iseparate iand iapart ifrom iits iowner?
A. iCorporation
B. iPartnership
C. iSole iproprietorship
D. iS icorporation i- iCorrect iAnswers i-C
Under iwhich icircumstance iis ian ientity irequired ito iapply ifor ia inew iemployer
iidentification inumber?
A. iProprietorship ithat iincorporates
B. iBusiness iname ichange
C. iElecting ior irevoking iS icorp istatus
D. i50% ichange iof iinterest iin ipartnership iwithin i12 imonths. i- iCorrect iAnswers i-A
LLC's imay ibe ian iattractive ismall ibusiness ialternative ias iopposed ito ian iS icorp
ibecause iLLC's ioffer ithe ifollowing iadvantage(s) inot iavailable iin iS icorps:
A. iInclusion iof ientity-level iliabilities iin itax ibasis
B. iPass-through itaxation
C. iFlexibility iin itypes iof iowners iand iownership iinterest
D. iBoth iinclusion iof ientity-level iliabilities iin itax ibasis iand iflexibility iin itypes iof iowners
iand iownership iinterests. i- iCorrect iAnswers i-D
A idomestic iLLC iwith iat ileast itwo imembers ithat idoes inot ifile iForm i8832, iEntity
iClassification iElection, iis iclassified ias
A. iAn ientity idisregarded ias ian ientity iseparate ifrom iits iowners iby iapplying ithe irules iin
iRegulations iSection i301.7701-3
B. iA ipartnership
C. iA icorporation
D. iA inon-entity ithat irequires imembers ito ireport ithe iincome iand irelated iexpenses ion
iForm i1040 i- iCorrect iAnswers i-B
, Which iof ithe ifollowing istatements iregarding iaccounting imethods iis ifalse?
A. iIf iinventories iare inecessary, ithe iaccrual imethod iis iused ifor isales iand ipurchases
B. iA icombination i(hybrid) imethod iis inot ian iacceptable imethod iof iaccounting
C. iA ichange ifrom ithe iaccrual ito ithe icash imethod iof iaccounting irequires iconsent ifrom
ithe iIRS
D. iUnder ithe icash imethod iof iaccounting, igross iincome iincludes iall iitems iof iincome
iactually ior iconstructively ireceived iduring ithe iyear i- iCorrect iAnswers i-B
You ican icompute iyour itaxable iincome iunder iwhich iof ithe ifollowing iaccounting
imethods?
A. iHybrid imethod
B. iAccrual imethod
C. iSpecial imethod ifor icertain iitems
D. iAll iof ithe ianswers iare icorrect i- iCorrect iAnswers i-D
Which iof ithe ifollowing iaccounting ichanges ido inot irequire ithe ifiling iof iForm i3115 ito
irequest ia ichange iin iaccounting imethod?
A. iCorrection iof ia imath ierror
B. iChange ifrom iaccrual imethod ito icash imethod
C. iChange iin ithe imethod iinventory iis ivalued
D. iChange ifrom icash imethod ito iaccrual imethod i- iCorrect iAnswers i-A
Which iof ithe ifollowing iaccounting imethods iis inot ian iacceptable imethod iof ireporting
iincome iand iexpenses?
A. iIf ian iinventory iis inecessary ito iaccount ifor iyour iincome, iyou imust iuse ian iaccrual
imethod ifor ipurchases iand isales. iYou ican iuse ithe icash imethod ifor iall iother iitems iof
iincome iand iexpenses.
B. iIf iyou iuse ithe icash imethod ifor ifiguring iyour iincome, iyou ican iuse ithe iaccrual
imethod ifor ifiguring iyour iexpenses.
C. iAny icombination ithat iincludes ithe icash imethod iis itreated ias ithe icash imethod.
D. iYou ican iuse idifferent iaccounting imethods ifor ireporting ibusiness iand ipersonal
iitems. i- iCorrect iAnswers i-B
Generally, iall iof ithe ifollowing ientities imay iuse ithe icash imethod iof iaccounting iexcept
A. iA ifamily ifarming icorporation iwith igross ireceipts iof i$25 imillion ior iless.
B. iAn ientity iwith ino iinventories iand iaverage igross ireceipts iof i$5 imillion ior iless.
C. iA iqualified ipersonal iservice icorporation.
D. iA icorporation ithat ihas ilong-term icontracts. i- iCorrect iAnswers i-D
A icash-basis itaxpayer ishould ireport igross iincome
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