11) Income tax expense appears on the:
A) tax return.
B) statement of stockholders' equity.
C) income statement.
D) balance sheet.
12) Income tax payable appears on the:
A) statement of retained earnings.
B) statement of stockholders' equity.
C) income statement.
D) balance sheet.
13) Which of the following statements is TRUE?
A) The income tax return is prepared using GAAP.
B) The income tax return is prepared using rules set by the SEC.
C) The income tax return is prepared using rules set by the IRS.
D) The income tax return and the income statement are identical.
14) The formula to determine income tax expense is:
A) taxable income (from the income tax return) multiplied by the income tax rate.
B) taxable income(from the income statement) multiplied by the income tax rate.
C) income before income tax expense (from the tax return) multiplied by the income tax rate.
D) income before income tax expense (from the income statement) multiplied by the income tax rate.
15) The formula to determine income tax payable is:
A) taxable income (from the income tax return) multiplied by the income tax rate.
B) taxable income(from the income statement) multiplied by the income tax rate.
C) income before income tax expense (from the tax return) multiplied by the income tax rate.
D) income before income tax expense (from the income statement) multiplied by the income tax rate.
16) Assume it is the first year of operations. When pretax accounting income exceeds taxable income, a:
A) Deferred Tax Asset is debited.
B) Deferred Tax Liability is credited.
C) Deferred Tax Asset is credited.
D) Deferred Tax Liability is debited.
17) Eastwich Corporation has pretax accounting income of $575,000 and taxable income of $560,000. The company's income tax rate is 30%. The journal entry to record the income tax includes a:
A) debit to Deferred Tax Asset $4,500.
B) credit Income Tax Payable $172,500.
C) credit to Deferred Tax Liability $4,500.
D) debit Income Tax Expense $168,000.
18) Western Corporation has taxable income of $390,000 and pretax accounting income of $363,000. The company's income tax rate is 30%. The journal entry to record the income tax includes a:
A) debit to Income Tax Expense $117,000.
B) credit to Deferred Tax Asset $8,100.
C) debit to Deferred Tax Asset $8,100.
D) credit to Income Tax Payable $108,900.
19) The estimated value of a share of a company's stock is less than the current market price per share. The appropriate investment decision should be to:
A) buy the company's stock.
B) hold the company's stock.
C) sell the company's stock.
D) sell the company's stock on the margin.
20) The following earnings per share information is available for a stock you are interested in purchasing as an investment:
Earnings Per Share:
|
|
Income from continuing operations
|
$3.75
|
Income from discontinued operations
|
1.05
|
Extraordinary gain
|
0.45
|
Net income
|
$5.25
|
The investment capitalization rate is 7.5%. How much should an investor pay for a share of stock?
A) $50.00
B) $58.00
C) $64.00
D) $70.00