Accounting Periods and Methods and Depreciation

gChapter 7: Accounting Periods and Methods and DepreciationChapter 7: Accounting Periods and Methods and Depreciation

Student: ___________________________________________________________________________

1. The hybrid method of accounting involves the use of both the accrual and cash methods of accounting.

True False

2. In general, accrual basis taxpayers recognize income when it is earned, regardless of when it is received.

True False

3. Generally, cash basis taxpayers must account for payments of prepaid interest using the accrual method.

True False

4. Under MACRS the same method of depreciation (accelerated or straight-line) must be used for all property in a given class placed in service during that year.

True False

5. Under the cash basis of accounting, expenses are generally deducted in the year they are paid.

True False

6. Depreciation is the process of allocating the cost of assets to expense over a period of years.

True False

7. Maintenance costs for capital assets are deducted in the year the amount is paid or incurred.

True False

8. The IRS will automatically grant a request for a change in tax years, provided the proper form is filed in a timely manner.

True False

9. "Annualizing" is a method by which the taxpayer can usually decrease the amount of tax he or she pays.

True False

10. If land declines in value, it may be depreciated for tax purposes.

True False

11. If an asset's actual useful life is longer than the assigned recovery period, the MACRS tables cannot be used.

True False

12. All S corporations must use the accrual basis of accounting.

True False

13. Taxpayers must use the straight-line method of depreciation for all productive assets.

True False

14. All S corporations must adopt a calendar tax year.

True False

15. Partnerships may adopt any fiscal tax year as long as the tax year is used consistently.

True False...