Question

Azure Mapping Solutions, Inc., is an advisory corporation owned by outside investors with $9 million in annual gross receipts. It should use:

a.the accrual basis of accounting because it has no inventory.

b.the cash basis of accounting because its annual gross receipts exceed $5 million.

c.the accrual basis of accounting because its annual gross receipts exceed $5 million.

d.the cash basis of accounting because it is an advisory corporation.

Which of the following statements is true about IRS Publication 538, Accounting Periods and Methods?

a.It strictly prohibits the use of cash basis accounting.

b.It allows the use of only hybrid basis accounting.

c.It strictly prohibits the use of accrual basis accounting.

d.It provides information that helps a business in selecting a basis of accounting.

Which of the following is true about interim financial statements prepared before the end of a fiscal period?

a.Publicly traded corporations are required to file interim financial statements using Form 10-Q.

b.Interim financial statements are verified by an auditor.

c.Interim financial statements do not require the posting of adjusting entries.

d.Publicly traded corporations are exempt from filing interim financial statements.

Answer 1

1. c.the accrual basis of accounting because its annual gross receipts exceed $5 million.

2. d.It provides information that helps a business in selecting a basis of accounting.

3. a.Publicly traded corporations are required to file interim financial statements using Form 10-Q.

These are filled quarterly

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