Practice Quiz

RTRP - IRS Registered Tax Return Preparer Test - Question List

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36. Margaret Smith is a CPA who is representing John & Mary Jones before the Wage and Investment Division of the Internal Revenue Service. The Service is questioning John & Mary on contributions that were listed on page 2 of their 2004 Form 1040. While reviewing the documentation provided by John & Mary, Margaret discovers contributions that were made to a non-qualified organization. What is the appropriate action for Margaret to take?
  1. Margaret must advise John & Mary on how to keep the omission from being discovered by the IRS.
  2. Margaret must notify the Internal Revenue Service that she is no longer representing John & Mary by withdrawing her Form 2848.
  3. Margaret must advise John & Mary promptly of the omission and the consequences provided by the Internal Revenue Code and Regulations for such omission.
  4. Margaret must immediately advise the Internal Revenue Service examiner of the non-qualified contributions.
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37. If Petey’s Printing signs a contract on December 28 with Bart’s Brewskies to provide him with 1,000 going-out-of-business flyers, but the work will not be performed until January of the following year, where will this transaction be recorded on the December 31 balance sheet?
  1. In the owner’s equity section
  2. In the liabilities section
  3. In the assets section
  4. In the unearned income section
  5. It will not appear on the balance sheet
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38. Larry the Lawyer is going to represent Bart’s Brewskies in an upcoming litigation. Bart is being sued for representing his brewskies as being non-alcoholic, when in fact, they were 80-proof. Larry has asked Bart for a retainer of $1,000 before he’ll even meet with Bart. Assuming the accrual basis of accounting is in play, that $1,000 is considered (for Larry):
  1. Revenue and a receipt
  2. An accounts receivable
  3. A receipt
  4. Revenue
  5. An accounts payable
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39. Bart’s Brewskies is reconciling the company’s bank account. Assuming that all transactions flow through one account, which of the following transactions will Bart’s subtract from their bank statement’s ending balance to reconcile the accounts?
  1. Bounced checks from customers
  2. Checks that Bart wrote to purchase more hops that are not showing as cashed
  3. Deposits in transit to the bank.
  4. Cashed checks
  5. Missing deposits
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40. Bart’s Brewskies is considering firing their new accountant. Bart misclassified one of his expenses and even though Bart was the one who made the error, he says the accountant should have caught it when he prepared the trial balance. Is he correct?
  1. No. He’s wrong.
  2. Yes. He’s correct.
  3. There’s not enough information to answer the question.
  4. It depends upon how much the expense was.
  5. Bart was sampling the stock again and didn’t know what he was talking about.
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