DeVry ACCT 324Midterm Exam

DeVry ACCT 324Midterm Exam

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1. Question : (TCO 9) In terms of probability, which of the following taxpayers would least likely be audited by the IRS?
Student Answer: Taxpayer owns and operates a check-cashing service.
Taxpayer is a self-employed electrician.
Taxpayer just received a $3 million personal injury award as a result of a lawsuit.
Taxpayer just won a $1 million slot machine jackpot at a Las Vegas casino.
Taxpayer is employed as a special agent by the IRS.

2. Question : (TCO 9) A characteristic of fraud penalties is:
Student Answer: Civil fraud can result in a fine and a prison sentence.
When negligence and civil fraud apply to a deficiency, both penalties are imposed.
The criminal fraud penalty is 75% of the deficiency attributable to the fraud.
The IRS has a greater burden of proof in the case of criminal fraud than with civil fraud.
None of the above

3. Question : (TCO 1) Federal tax legislation generally originates in what body?
Student Answer: Internal Revenue Service
Senate Finance Committee
House Ways and Means Committee
Senate floor
None of the above