Principles of Taxation 2020 By Sally Jones 23rd Edition- Test Bank

Principles of Taxation 2020 By Sally Jones 23rd Edition- Test Bank

Principles of Taxation for Business and Investment Planning, 23e (Jones)
Chapter 6 Taxable Income from Business Operations

1) For federal tax purposes, gross income from the sale of tangible goods is reduced by the seller’s cost of goods sold.

Answer: TRUE
Difficulty: 1 Easy
Topic: Business Profit as Taxable Income
Learning Objective: 06-01 Define gross income and taxable income.
Accessibility: Keyboard Navigation
Type: Static
Gradable: automatic

2) Taxable income is defined as gross income minus allowable deductions and credits.

Answer: FALSE
Difficulty: 1 Easy
Topic: Business Profit as Taxable Income
Learning Objective: 06-01 Define gross income and taxable income.
Accessibility: Keyboard Navigation
Type: Static
Gradable: automatic

3) A taxpayer that wants to change its taxable year from a fiscal year to a calendar year is not required to receive permission from the IRS to make the change.

Answer: FALSE
Difficulty: 1 Easy
Topic: The Taxable Year
Learning Objective: 06-02 Describe the relationship between business operating cycle and taxable year.
Accessibility: Keyboard Navigation
Type: Static
Gradable: automatic

4) A firm’s choice of taxable year is usually dictated by the annual operating cycle of the firm’s business.

Answer: TRUE
Difficulty: 1 Easy
Topic: The Taxable Year
Learning Objective: 06-02 Describe the relationship between business operating cycle and taxable year.
Accessibility: Keyboard Navigation
Type: Static
Gradable: automatic

5) When an individual taxpayer begins a new business as a sole proprietorship and wants to keep records on a fiscal year basis, permission to change taxable years is not required because this is a new business.

Answer: FALSE
Difficulty: 2 Medium
Topic: The Taxable Year
Learning Objective: 06-02 Describe the relationship between business operating cycle and taxable year.
Accessibility: Keyboard Navigation
Type: Static
Gradable: automatic