Kaplan University AC 507 Unit 1 Quiz

 1. Question : What is a corporation's alternative minimum tax rate?

  Student Answer:   15%

      20%

     26%

     28%

 2. Question : Which of the following business entities does not file a separate tax return to report business operations?

  Student Answer:    Sole proprietorship

     S corporation

     C corporation

     Partnership

 3. Question : Hoku Corporation (a C corporation) had the following history of income and loss:
Year Income (Loss)
2009 $40,000
2010 $70,000
2011 ($10,000)
How much of a tax refund can Hoku Corporation receive by carrying back its 2011 loss?

  Student Answer:    $1,500

     $2,500

     $3,500

     None; it cannot carry its loss back

 4. Question : Which of these persons never pays taxes directly?

  Student Answer:   Individual

      Partnership

     C corporation

     Fiduciary

 5. Question : Which of the following is not a characteristic of an S corporation?

  Student Answer:   Owners have limited liability

      The corporation is taxed directly on operating income

     The corporation can have no more than 100 shareholders

     Shareholders must consent to the S election by the corporation

 6. Question : The Mercury Corporation must decide whether to invest in some new machinery for its business. Which tax rate is the most relevant for making this decision?

  Student Answer:   The average tax rate

      The marginal tax rate

     The nominal tax rate

     The effective tax rate

 7. Question : What is the gain or loss on the sale of an asset for $68,000 if the asset cost $185,000, depreciation expense deducted was $124,000, repair costs were $12,000, and there was a $19,000 major addition to the asset?

  Student Answer:   $0

      $12,000 loss

     $7,000 gain

     $24,000 loss