A taxpayer sells stock in 2012. Where is the sale first reported by the taxpayer? a. Incorrect. While the result of the stock sale will flow onto Schedule D, it is not entered first on this schedule. b. Incorrect. The net capital gain (or loss) eventually is reported on Form 1040, but not first (even if the sale is the taxpayer”s only capital transaction for […]

A taxpayer sells 100 shares of X Corp. at a loss on December 15, 2012. Which of the following acquisition dates for acquiring substantially identical stock will not trigger the wash sale rule? a. Incorrect. The 30-day wash sale period applies to purchases of substantially identical stock within 30 days before the sale, which would be November 15, 2012. b. Incorrect. The fact that a […]

A taxpayer, who is single, sells his condo in February 2012. He buys a new home, weds in June 2012, and his new bride moves in at that time. Gain on the sale of his condo is $275,000. Assuming he owned and used the condo as his main home for two out of the last five years, he can: a. Incorrect. It is correct that […]

Which of the following unforeseen circumstances would not entitle a homeowner to a partial home sale exclusion? a. Incorrect. If a taxpayer has triplets, these multiple births are recognized by the IRS as an unforeseen circumstance. b. Correct. Even though winning the lottery is an unforeseen event, it is not the type of event that the IRS recognizes as a reason for permitting a partial […]

On February 1, 2010, Kevin, a single taxpayer, buys a condominium in North Dakota. On April 3, 2011, he suffers a stroke and, following hospitalization, is transferred to a nursing home. While he was living in the nursing home, his daughter, acting under a power of attorney, sells the condo in December 2012 for a gain of $48,000. How is the gain treated? a. Correct. […]

Cosmos Ltd. manufactures three types of products A, B and C. The sales territory of the company is divided into three areas: North, South and Central. The estimated sales for the year are as follows: North South Central Product A Rs. 1,00,000 Rs. 40,000 Nil Product B Rs. 60,000 Nil Rs. 1,60,000 Product C Nil Rs. 1,40,000 Rs. 80,000 Budgeted advertising cost is as follows: […]

XYZ Ltd, a manufacturing company, having an extensive marketing network throughout the country, sells its products through four zonal offices, viz. A, B, C and D. The budgeted expenditure for the year is given below: Sales manager’s salary 1,20,000 Expenses relating to sales 80,000 manager’s office Travelling salesmen’s salaries 3,20,000 Travelling expenses 36,000 Advertisements 30,000 Godown Rent: Zone A – Rs. 15,000 Zone B – […]

A company manufacturing two products furnishes the following data for a year: Product Annual Output (Units) Total Machine Hours Total Number ofPurchase Orders Total Number of Setups A 10,000 15,000 120 20 B 40,000 85,000 480 30 The annual overheads are: Volume-related activity costs : 4,50,000 Setup-related costs : 9,00,000 Purchase-related costs : 6,50,000 You are required to calculate the cost per unit of product […]

XYZ Ltd has collected the following data for its two activities. It calculates activity cost rates based on cost-driver capacity: Activity: Cost driver Capacity Cost (Rs.) Power: Kilowatt hours 20,000 k.w. hrs 1,00,000 Quality inspection: Number of inspections 5,000 Inspection 2,00,000 The company makes three products X, Y and Z. For the year ended 31 March 2010, the following consumption of cost driver was reported: […]

Fill in the blanks with suitable word(s) ________________ costs are identified properly under ABC system of accounting technique. Identification of indirect costs with each activity is known as ____________. ________________ form the basis of ABC system. ________________ is the technique which involves identification of costs with each cost-driving activity. Cost objects are ______________ in ABC system. “Cost pool” is used in the place of _____________ […]