supplementary study guide/syllabus to accompany the quarterly … · quarterly cpe exam on topics...

“Money can't buy you happiness, but it helps you look for it in a lot more places!”...Milton Berle, American comedian

Supplementary Study Guide/Syllabus to Accompany theQuarterly CPE Exam on

Topics Addressed in the Journal of Accountancy

Fourth Quarter (October – December), 2019

Instructions: Before you start a section of the CPE Final Exam, complete the corresponding section of this

Supplementary Study Guide. Do NOT submit answers to the Review Questions.

Purpose: To provide an interactive learning experience by listing

Learning Objectives and Review Questions with Suggested Answers and Explanations.

OUTLINE: The section numbers of the Study Guide correspond to section numbers of the Final Exam. The page numbers below refer to the first page of each article in the printed version of the JofA.

Sections I - III Relate to the Journal of Accountancy of October 2019:

Section I. A Different Approach to Blockchain (Page 20)

Section II. Uncovering Bribes Hidden in Books and Records (Page 28)

Section III. Responding to the Gig Economy (Page 34)

Sections IV - VII Relate to the Journal of Accountancy of November 2019:

Section IV. What's Your Fraud IQ? (Page 22)

Section V. New Laws Bring Much Tougher Data Protections (Page 36)

Section VI. Planning for Medicare Taxes, Premiums, and Surcharges (Page 44)

Section VII. Responsible Person Rules in the Wake of Wayfair? (Page 52)

Sections VIII - IX Relate to the Journal of Accountancy of December 2019:

Section VIII. Keep Clients Coming to You with PFP Services (Page 30)

Section IX. What it Takes for Accounting Firms to Recruit Gen Z (Page 36)

The Learning Objectives are stated in each of the following sections.

Section I. A Different Approach to Blockchain (0)

Section I Assignment:1. Study the articles (reference text) in the Journal of Accountancy, paying particular attention to our

Learning Objectives stated below. 2. Answer our Review Questions that have been designed to provide an interactive learning experience.3. Study the Solutions and Suggested Responses to the Review Questions.4. Answer Final Exam questions 1 through 5.

Section I Learning Objectives:1. Learn how blockchain technology helped the author resolve challenges in the sale of income tax

credits.2. Consider how blockchain technology can be useful in other areas and how it will change the

practice of accounting.3. If not already, consider how to prepare for and benefit from blockchain.

Section I Review Questions: 1. What caused the author to consider how blockchain could apply to accounting?

a. E-filing tax returns.b. Trading stock online.c. Using cloud-based accounting software.d. Helping a friend sell tax credits.e. purchasing IT services using cryptocurrency.

2. Why would someone want to sell a $500,000 state income tax credit at a discount?a. They can claim a tax deduction for the discount.b. They wouldn't; they would claim the credit on their state income tax return and get the refund.c. The state tax credit is not refundable (meaning it can only be used to offset the tax liability)

and they will never have enough state income tax liability to use the entire credit. d. It is a great estate planning strategy.e. The proceeds are taxed at the favorable capital gains rates.

3. The author tried helping a friend sell tax credits but did not succeed because:a. The credits were not transferable.b. The seller would not sell at a discount.c. The buyer wanted to pay cash but the seller wanted a ten year note with interest.d. The state department of revenue disallowed the transfer.e. Ultimately, the buyer and seller were unable to achieve a sufficient level of trust.

4. According to the author, lack of trust has resulted in a limited number of potential buyers of tax credits (wealthy individuals with cash), but blockchain can expand the market by: a. Moving all transactions online.b. Instilling trust in people rather than technology.c. Instilling trust in technology rather than people.d. Attracting overseas buyers of state tax credits.e. Instilling trust by using an intermediary.

5. One application of blockchain technology that ensures both parties uphold their end of the bargainbefore allowing the transaction to occur is:a. Identity verification.b. Electronic funds transfer.c. A smart contract.d. An electronic contract.e. Contract encryption.

Section I Solutions and Suggested Responses to Review Questions appear on the next page.

Section I Solutions and Suggested Responses to Review Questions:

Review Question 1. (Please see page 21 of October JofA.) a. Incorrect. The author tried to help a friend sell state income tax credits.b. Incorrect. The author tried to help a friend sell state income tax credits.c. Incorrect. The author tried to help a friend sell state income tax credits.d. Correct. The author tried to help a friend sell state income tax credits.e. Incorrect. The author tried to help a friend sell state income tax credits.

Review Question 2. (Please see page 21 of October JofA.) a. Incorrect. The discount on the sale is not a tax deduction. See answer c. b. Incorrect. The credit owner is willing to sell at a discount because they wouldn't have enough

income to benefit from the credit.c. Correct. The credit owner is willing to sell at a discount because they wouldn't have enough

income to benefit from the credit.d. Incorrect. The article doesn't mention estate planning. See answer c.e. Incorrect. The proceeds are not taxable.

Review Question 3: (Please see page 22 of October JofA.) a. Incorrect. The credits were transferable. See answer e.b. Incorrect. Without a discount, a buyer has no incentive to purchase. See answer e.c. Incorrect. The seller didn't demand a note. See answer e.d. Incorrect. The buyer and seller couldn't reach a level of trust.e. Correct. The buyer and seller couldn't reach a level of trust.

Review Question 4. (Please see pages 22 of October JofA.) a. Incorrect. It is the blockchain technology that instills trust, not the online process.b. Incorrect. Blockchain instills trust in the technology, not people.c. Correct. Blockchain technology instills trust in the process.d. Incorrect. To benefit, a buyer would need to have a state tax liability. Overseas residence is not

relevant.e. Incorrect. Blockchain would eliminate the intermediary.

Review Question 5. (Please see page 22 of October JofA.) a. Incorrect. Blockchain enables use of a smart contract.b. Incorrect. Blockchain enables use of a smart contract.c. Correct. Blockchain enables use of a smart contract.d. Incorrect. Blockchain enables use of a smart contract.e. Incorrect. Blockchain enables use of a smart contract.

=========================================End of Section I.

Section II. Uncovering Bribes Hidden in Books and Records (Page 28)

Section II Assignment:1. Study the article (reference text) in the Journal of Accountancy, paying particular attention to our

Learning Objectives stated below.2. Answer our Review Questions that have been designed to provide an interactive learning experience.3. Study the Solutions and Suggested Responses to the Review Questions.4. Answer Final Exam questions 6 through 10.

Section II Learning Objectives:1. To gain a general awareness of provisions of the Foreign Corrupt Practices Act. 2. Learn from the author's examples some of the risks, particularly of bribery, and the role of

accounting controls.3. Consider whether this information may be relevant to your clients or employer.

Section II Review Questions:1. FCPA stands for:

a. Fraud and Corrupt Practices Act.b. Financial Crimes Prosecution Administration.c. Fair Consumer Protection Agency.d. Foreign Countries Principals of Accounting.e. Foreign Corrupt Practices Act.

2. One continuing violation of the FCPA mentioned by the authors is:a. Failing to withhold US taxes on employees working abroad.b. False advertising in foreign markets.c. Schemes involving bribes paid to foreign officials to advance business interests.d. Companies that move production to foreign factories to avoid US tax.e. Companies doing business in countries that don't have a tax treaty with the US.

3. The FCPA has two provisions that address:a. False advertising and product liability.b. Tax fraud and accounting.c. Bribery and extortion.d. Bribery and accounting.e. Bribery and tax fraud.

4. The most common issue for companies that have FCPA troubles is: a. Lack of adequate internal controls.

b. Weak financial performance.c. Lack of board involvement.d. Extremely rapid growth.e. Inconsistent accounting policies for bribe payments.

5. In a study of fifty-seven companies, the authors noted a variety of account categories were used tohelp conceal corrupt payments. The most common account category noted was:a. Consulting.b. Commissions.c. Marketing.d. Gifts, travel and entertainment.e. Other business expenses.

Section II Solutions and Suggested Responses to Review Questions appear on the next page.

Section II Solutions and Suggested Responses to Review Questions:

Review Question 1. (Please see page 29 of October JofA.) a. Incorrect. Foreign Corrupt Practices Act.b. Incorrect. Foreign Corrupt Practices Act.c. Incorrect. Foreign Corrupt Practices Act.d. Incorrect. Foreign Corrupt Practices Act.e. Correct. Foreign Corrupt Practices Act.

Review Question 2. (Please see page 29 of October JofA.) a. Incorrect. Schemes involving bribes paid to foreign officials to advance business interests.b. Incorrect. Schemes involving bribes paid to foreign officials to advance business interests.c. Correct. Schemes involving bribes paid to foreign officials to advance business interests.d. Incorrect. Schemes involving bribes paid to foreign officials to advance business interests.e. Incorrect. Schemes involving bribes paid to foreign officials to advance business interests.

Review Question 3. (Please see page 30 of October JofA.) a. Incorrect. Bribery and accounting.b. Incorrect. Bribery and accounting.c. Incorrect. Bribery and accounting.d. Correct. Bribery and accounting.e. Incorrect. Bribery and accounting.

Review Question 4. (Please see pages 31 of October JofA.) a. Correct. Lack of adequate internal controls.b. Incorrect. Lack of adequate internal controls.c. Incorrect. Lack of adequate internal controls.d. Incorrect. Lack of adequate internal controls.e. Incorrect. Lack of adequate internal controls.

Review Question 5. (Please see page 31 of October JofA.) a. Incorrect. Other business expenses.b. Incorrect. Other business expenses. c. Incorrect. Other business expenses.d. Incorrect. Other business expenses.e. Correct. Other business expenses.

=========================================End of Section II.

Section III. Responding to the Gig Economy (Page 34)

Section III Assignment:1. Study the articles (reference text) in the Journal of Accountancy, paying particular attention to our

Learning Objectives stated below.2. Answer our Review Questions that have been designed to provide an interactive learning experience.3. Study the Solutions and Suggested Responses to the Review Questions.4. Answer Final Exam questions 11 through 15.

Section III Learning Objectives:1. To become familiar with the “gig” economy.2. To consider how “gig” economy participants could become attractive clients.3. To learn the tax issues that can affect the “gig” economy participant.

Section III Review Questions:

1. According to a report from MBO Partners, how many Americans were classified as “independent contractors” in 2018:a. 3.0 million.b. 3.3 million.c. 4.2 million.d. 33 million.e. 42 million.

2. Why would CPA firms be interested in the growing numbers of the self-employed?a. Studies show self-employed taxpayers earn high incomes and so tend to be good-paying

clients.b. Self-employed clients can offer more opportunities to barter services, which are non-taxable.c. Tax situations of the self-employed tend to be more complex and so more services may be

needed.d. Tax return preparation for the self-employed is generally less time-consuming than for

taxpayers with Form W-2 income.

3. On the subject of taxes, one of the biggest needs of the self-employed is:a. Understanding how payroll taxes “work.”b. Dealing with all the various deadlines for tax forms and payments.c. Understanding the depreciation rules.d. Maximizing and substantiating business expenses.e. Getting good advice on the choice of entity decision.

4. The author reminds CPAs to emphasize to clients that:a. Clients can find all the tax advice they need with an internet search.b. Clients should thoroughly research potential tax issues before consulting a CPA.c. CPAs can help with tax issues, but it won't help save money.d. CPAs can help navigate tax issues and likely maximize deductions and save money.e. A self-employed taxpayer can always claim home office expenses.

5. A CPA cited in the article has clients whose business is a “side hustle” that is in addition to theirregular job. These businesses can be small, but:a. Most ceased business in two to three years.b. No matter the size, the fees have been substantial.c. Many have grown into half-million dollar businesses and stayed with her firm.d. Once they grew to $500,000 in revenue, they moved to a larger firm.e. Her firm approached these “side hustles” with respect once they grew to $500,000 in

revenue.

Section III Solutions and Suggested Responses to Review Questions appear on the next page.

Section III Solutions and Suggested Responses to Review Questions:

Review Question 1. (Please see page 35 of October JofA.) a. Incorrect. There were an estimated 42 million independent contractors in 2018.b. Incorrect. There were an estimated 42 million independent contractors in 2018c. Incorrect. There were an estimated 42 million independent contractors in 2018d. Incorrect. There were an estimated 42 million independent contractors in 2018e. Correct. There were an estimated 42 million independent contractors in 2018.

Review Question 2. (Please see page 35 of October JofA.)a. Incorrect. Tax situations tend to be more complex so more services may be needed.b. Incorrect. Perhaps the opportunity to barter increases, but barter transactions are generally taxable.c. Correct. Tax situations tend to be more complex so more services may be needed.d. Incorrect. Tax situations tend to be more complex so more services may be needed.

Review Question 3: (Please see page 35 of October JofA.)a. Incorrect. Payroll taxes can be a challenge, but are not mentioned as a big need.b. Incorrect. Deadlines and forms are a challenge, but are not mentioned by the author.c. Incorrect. Depreciation is not noted in the article as a specific need, but for some clients this could

be a significant topic.d. Correct. Maximizing and substantiating business expenses.e. Incorrect. Entity choice is important, but not mentioned as one of the biggest tax needs.

Review Question 4. (Please see page 36 of October JofA.) a. Incorrect. Perhaps. But the article doesn't recommend it.b. Incorrect. CPAs may appreciate it, but not recommended in the article.c. Incorrect. CPA's can help navigate tax issues, maximize deductions and likely save money.d. Correct. CPA's can help navigate tax issues, maximize deductions and likely save money.e. Incorrect. Home office rules are important however, deduction is not automatic.

Review Question 5. (Please see page 37 of October y JofA.)a. Incorrect. This was not mentioned in the article.b. Incorrect. This was not mentioned in the article.c. Correct. Many have grown into half-million dollar businesses and stayed with the CPA's firm.d. Incorrect. Many have grown into half-million dollar businesses and stayed with the CPA's firm.e. Incorrect. The CPA firm took on the “gig” client while still small intent on helping them grow.

----------------------------------------------------End of Section III.

Section IV. What's Your Fraud IQ? (Page 22)

Section IV Assignment:1. Study the article (reference text) in the Journal of Accountancy, paying particular attention to our

Learning Objectives stated below. 2. Answer our Review Questions that have been designed to provide an interactive learning

experience.3. Study the Solutions and Suggested Responses to the Review Questions.4. Answer Final Exam questions 16 through 20.

Section IV Learning Objectives:1. Get a basic understanding of factors for planning and conducting a fraud assessment. 2. Learn some factors that can have an effect on a company's fraud risk. 3. Learn the possible responses to identified fraud risks.

Section IV Review Questions:1. Audit standards require auditors to evaluate an organization's:

a. Employee benefits package.b. Employee turnover.c. Executive compensation.d. Fraud risk.e. Vendor reliability.

2. When planning for a fraud risk assessment, the team should:a. Involve only management in any discussion.b. Operate in total secrecy to avoid tainted results.c. Report solely to one executive as most fraud is committed by management. d. Communicate throughout the organization about the process.e. Focus only on past fraud events.

3. The best way to get reliable information from a large sample of employees where confidentiality is a concern is:a. One-on-one interviews.b. Focus groups.c. Anonymous surveys.d. Small group interviews. e. Process walkthroughs.

4. Traditionally, risk assessment focused on two factors:a. Likelihood and occurrence.b. Likelihood and impact.c. Likelihood and velocity.d. Impact and velocity.e. Impact and significance.

5. Once the risks have been identified and assessed, the risks should be:a. Avoided.b. Transferred.c. Mitigated.d. Prioritized.e. All of the above.

Section IV Solutions and Suggested Responses to Review Questions follow on the next page.

Section IV Solutions and Suggested Responses to Review Questions:

Review Question 1. (Please see page 22 of November JofA.) a. Incorrect. Fraud risk.b. Incorrect. Fraud risk.c. Incorrect. Fraud risk.d. Correct. Fraud risk.e. Incorrect. Fraud risk.

Review Question 2. (Please see page 24 of November JofA.)a. Incorrect. Communicate throughout the organization about the process.b. Incorrect. Communicate throughout the organization about the process.c. Incorrect. Communicate throughout the organization about the process.d. Correct. Communicate throughout the organization about the process.e. Incorrect. Communicate throughout the organization about the process.

Review Question 3. (Please see page 25 of November JofA.)a. Incorrect. Anonymous surveys.b. Incorrect. Anonymous surveys.c. Correct. Anonymous surveys.d. Incorrect. Anonymous surveys.e. Incorrect. Anonymous surveys.

Review Question 4. (Please see page 25 of November JofA.)a. Incorrect. Likelihood and impact.b. Correct. Likelihood and impact.c. Incorrect. Likelihood and impact.d. Incorrect. Likelihood and impact.e. Incorrect. Likelihood and impact.

Review Question 5. (Please see page 25 of November JofA.) a. Incorrect. Prioritized.b. Incorrect. Prioritized.c. Incorrect. Prioritized.d. Correct. Prioritized.e. Incorrect. Prioritized.

===================================== End of Section IV.

Section V. New Laws Bring Much Tougher Data Protections (Page 36)

Section V Assignment:1. Study the article (reference text) in the Journal of Accountancy, paying particular attention to our


Section V Learning Objectives:

1. Learn the basic provisions of the California Consumer Privacy Act of 2018.2. Learn how entities not located in California can be subject to the act.3. Learn appropriate privacy measures and how they might be used by your business or clients.

Section V Review Questions:

1. The California Consumer Privacy Act of 2018 (CCPA) is effective:a. Jan. 1, 2018.b. Dec. 31, 2018.c. Jan. 1, 2019.d. Jan. 1, 2020.e. Jan. 1, 2021.

2. The CCPA grants five new statutory rights by relying upon:a. Recommendations from the Association of Certified Fraud Examiners.b. Recommendations from the Office of the Attorney General.c. Results of a 2016 survey of companies that experienced a data breach.d. The right to privacy in the California Constitution.e. Information gathered in Congressional Hearings with leaders of social media companies.

3. The CCPA establishes five new data privacy rights for consumers. Included are the right to:a. Know what personal data is being collected.b. Know whether their personal data has been shared or disclosed to others and if so, with

whom.c. Receive an email notification anytime their personal data has been shared or disclosed.d. a,b and c.e. a and b only.

4. California consumers have the “right to be forgotten.” This means:a. Upon request, the business is disallowed from contacting contacting the consumer, much like

the “Do Not Call” list.b. Upon request, the consumer's information cannot be sold or transferred to another party.c. Upon request, the consumer's information must be erased by the business and any third

parties with whom it was shared.d. The consumer's information is tagged as inactive and archived.e. The business must notify third parties that the consumer elected the opt-out option.

5. The CCPA obligates any entity doing business in California, to respond to consumers' requests, such as access to information, providing copies and deleting information.a. True. The CCPA applies to any entity doing business in California or handling personal

information of a California resident.b. False. The CCPA applies to companies having activities in California, but are considered

larger, based upon revenue or numbers of consumers handled.

Section V Solutions and Suggested Responses to Review Questions appear on the next page.

Section V Solutions and Suggested Responses to Review Questions:

Review Question 1. (Please see page 37 of November JofA.) a. Incorrect. The CCPA took effect Jan. 1, 2020.b. Incorrect. The CCPA took effect Jan. 1, 2020.c. Incorrect. The CCPA took effect Jan. 1, 2020.d. Correct. The CCPA took effect Jan. 1, 2020.e. Incorrect. The CCPA took effect Jan. 1, 2020.

Review Question 2. (Please see page 37 of November JofA.) a. Incorrect. The CCPA relied upon privacy rights in the California Constitution.b. Incorrect. The CCPA relied upon privacy rights in the California Constitution.c. Incorrect. The CCPA relied upon privacy rights in the California Constitution.d. Correct. The CCPA relied upon privacy rights in the California Constitution.e. Incorrect. The CCPA relied upon privacy rights in the California Constitution.

Review Question 3. (Please see page 37 of November JofA.)a. Incorrect. This is part of, but not the most complete answer.b. Incorrect. This is part of, but not the most complete answer.c. Incorrect. This is not part of the law, but an interesting thought.d. Incorrect. a and b are correct, but not c.e. Correct. a and b are correct, but not c.

Review Question 4: (Please see page 37 of November JofA.)a. Incorrect. The consumer can have their information erased by the business and any third party with

whom it was shared.b. Incorrect. The consumer can have their information erased by the business and any third party with

whom it was shared.c. Correct. The consumer can have their information erased by the business and any third party with

whom it was shared.d. Incorrect. The consumer can have their information erased by the business and any third party with

whom it was shared.e. Incorrect The consumer can have their information erased by the business and any third party with

whom it was shared.

Review Question 5: (Please see page 38 of November JofA.)a. Incorrect. The act is intended to apply to larger entities, based upon revenue or consumer counts.b. Correct. The act is intended to apply to larger entities, based upon revenue or consumer counts.

===================================== End of Section V.

Section VI. Planning for Medicare Taxes, Premiums, and Surcharges (Page 44)

Section VI Assignment:1. Study the article (reference text) in the Journal of Accountancy, paying particular attention to our


Section VI Learning Objectives:1. Learn about the different Medicare plans.2. Learn about Medicare surcharges and the potential “cliff effect.”3. Be able to calculate the total Medicare cost using a given set of facts.

Section VI Review Questions:

1. Medicare provides ____________ to Americans over the age of 65.a. Retirement income.b. Disability insurance.c. Life insurance.d. Health insurance.e. Long-term care insurance.

2. Medicare is provided free of cost to all who qualify.a. True.b. False.

3. According to J.P. Morgan Asset Mgt's Guide to Retire, the median traditional Medicare health care costs (premiums, co-pays and out-of-pocket) for a person age 65 in 2019 are estimated to be:a. $1,820.b. $5,000.c. $5,160.d. $8,180.e. $18,180.

4. The are two plan choices for Medicare:a. Traditional Medicare or Medicaid.b. Traditional Medicare or Medicare Choice.c. Traditional Medicare or Medicare Spousal Coverage.d. Traditional Medicare or Medicare Advantage.e. Traditional Medicare or Healthcare.gov.

5. Medicare Advantage is an alternative for which Medicare parts?a. Part A, Part B and Part C.b. Part A, Part C and Part D.c. Part A, Part B and Part D.d. Part A and Part B only.e. Part B and Part D only.

6. Each year the Centers for Medicare and Medicaid Services (CMS) sets the premium cost for:a. Part B.b. Parts A and B.c. Parts A, B and D.d. Parts A, B, C and D.e. Parts B and D only.

7. The 2019 base Part B monthly premium is:a. $12.40.b. $135.50.c. $189.60d. $270.90e. $352.20

8. Wealthier Medicare recipients may pay higher premiums on their:a. Part A coverage.b. Parts A and B coverage.c. Parts B and C coverage.d. Parts B and D coverage.e. Part C.

9. The higher Medicare premium surcharges are referred to as:a. SSA.b. MAGI.c. IRMAA.d. Macra.e. CMS.

10. To avoid higher Medicare premiums, one might consider:a. Delaying enrollment.b. If already enrolled, suspend and resume in two years.c. Purchase equivalent Part A and Part B through the marketplace exchange, rather than

Medicare.d. If enrollment is more than two years away, consider converting regular IRA funds to a

ROTH IRA, which can be withdrawn tax-free later.e. Wait until Medicare begins before withdrawing taxable retirement funds.

Section VI Solutions and Suggested Responses to Review Questions appear on the next page.

Section VI Solutions and Suggested Responses to Review Questions:

Review Question 1: (Please see page 45 of November JofA.) a. Incorrect. Medicare provides health insurance.b. Incorrect. Medicare provides health insurance.c. Incorrect. Medicare provides health insurance.d. Correct. Medicare provides health insurance.e. Incorrect. Medicare provides health insurance.

Review Question 2. (Please see page 45 of November JofA.) a. Incorrect. Participants pay a premium.b. Correct. Participants pay a premium. Review Question 3. (Please see page 45 of November JofA.) a. Incorrect. The estimated median traditional Medicare plan costs for 2019 are $5,160.b. Incorrect. The estimated median traditional Medicare plan costs for 2019 are $5,160.c. Correct. The estimated median traditional Medicare plan costs for 2019 are $5,160.d. Incorrect. The estimated median traditional Medicare plan costs for 2019 are $5,160.e. Incorrect. The estimated median traditional Medicare plan costs for 2019 are $5,160.

Review Question 4. (Please see page 45 of November JofA.) a. Incorrect. The two choices are Traditional Medicare or Medicare Advantage.b. Incorrect. The two choices are Traditional Medicare or Medicare Advantage.c. Incorrect. The two choices are Traditional Medicare or Medicare Advantage.d. Correct. The two choices are Traditional Medicare or Medicare Advantage.e. Incorrect. The two choices are Traditional Medicare or Medicare Advantage.

Review Question 5. (Please see page 45 of November JofA.) a. Incorrect. Part A, Part B and often Part D.b. Incorrect. Part A, Part B and often Part D.c. Correct. Part A, Part B and often Part D.d. Incorrect. Part A, Part B and often Part D.e. Incorrect. Part A, Part B and often Part D.

Review Question 6: (Please see page 47 of November JofA.) a. Correct. Part B.b. Incorrect. Part B. Part A is free.c. Incorrect. Part B. A is free and Plan D premiums depend upon the private plan selected.d. Incorrect. Part B. A is free and Plan D premiums depend upon the private plan selected.e. Incorrect. Plan D premiums depend upon the private plan selected.

Review Question 7. (Please see page 47 of November JofA.) a. Incorrect. $135.50 is the monthly base premium for 2019.b. Correct. $135.50 is the monthly base premium for 2019.c. Incorrect. $135.50 is the monthly base premium for 2019.d. Incorrect. $135.50 is the monthly base premium for 2019.e. Incorrect. $135.50 is the monthly base premium for 2019. Review Question 8. (Please see page 47 of November JofA.) a. Incorrect. Part A is free are free.b. Incorrect. Part B is correct. Part A coverage is free.c. Incorrect. Part B is correct, Part C is not subject to surcharges.d. Correct. Parts B and D are subject to surcharges.e. Incorrect. Part C is not subject to surcharges.

Review Question 9. (Please see page 47 of November JofA.) a. Incorrect. IRMAA (income-related monthly adjustment amounts).b. Incorrect. IRMAA (income-related monthly adjustment amounts).c. Correct. IRMAA (income-related monthly adjustment amounts).d. Incorrect. IRMAA (income-related monthly adjustment amounts).e. Incorrect. IRMAA (income-related monthly adjustment amounts).

Review Question 10. (Please see page 49 of November JofA.) a. Incorrect. If done more than two years before Medicare eligibility, converting Regular IRA funds to

a ROTH IRA can reduce taxable income in future years used to determine IRMAA. b. Incorrect. If done more than two years before Medicare eligibility, converting Regular IRA funds to a a ROTH IRA can reduce taxable income in future years used to determine IRMAA. c. Incorrect. If done more than two years before Medicare eligibility, converting Regular IRA funds to

a ROTH IRA can reduce taxable income in future years used to determine IRMAA. d. Correct. If done more than two years before Medicare eligibility, converting Regular IRA funds to

a ROTH IRA can reduce taxable income in future years used to determine IRMAA. e. Incorrect. If done more than two years before Medicare eligibility, converting Regular IRA funds to

a ROTH IRA can reduce taxable income in future years used to determine IRMAA.

======== End of Section VI

Section VII. Responsible Person Rules in the Wake of Wayfair (Page 52)

Section VII Assignment:1. Study the article (reference text) in the Journal of Accountancy, paying particular attention to our


Section VII Learning Objectives:1. Refresh your understanding of the elements of the Wayfair decision.2. Learn about “responsible person” rules states have regarding liability for sales tax.3. Consider how the responsible person rules could potentially effect you or your clients.

Section VII Review Questions:

1. The ruling in South Dakota v. Wayfair, Inc. has increased exposure to sales tax for businesses:a. Shipping overseas.b. Selling product only in South Dakota.c. Selling only in their home state.d. Selling in multiple states. e. Providing services only in South Dakota.

2. Sales and use taxes are taxes held “in trust” for the state until remitted. Similar to payroll taxes withheld, these can be referred to as:a. Business taxes.b. Excise taxes.c. Ad valoreum taxes.d. Trust fund taxes.e. Tariffs.

3. Sales and use taxes are not imposed on the seller. a. True. The tax is owed by the purchaser. The seller is merely the unpaid collection agent.b. False. The seller pays the tax.

4. Each state can have different rules to determine who is a responsible person. Which of the following might be deemed a responsible party?a. Owners.b. Officers.c. Controllers.d. Employees with tax filing responsibilities.e. All of the above.

5. To protect against liability for sales tax obligations a business owner should always operate as a corporation.a. True. In all states, having a corporation shields all owners, officers, directors and employees

from any personal liability for failure to file and remit sales tax.b. False. The purpose of the responsible person rules is to look past the entity to the person

when the business has failed to comply with sales tax laws.

Section VII Solutions and Suggested Responses to Review Questions appear on the next page.

Section VII Solutions and Suggested Responses to Review Questions:

Review Question 1: (Please see page 53 of November JofA.) a. Incorrect. As a result of Wayfair, sellers in multiple states may be exposed to sales tax rules.b. Incorrect. As a result of Wayfair, sellers in multiple states may be exposed to sales tax rules.c. Incorrect. As a result of Wayfair, sellers in multiple states may be exposed to sales tax rules.d. Correct. As a result of Wayfair, sellers in multiple states may be exposed to sales tax rules.e. Incorrect. As a result of Wayfair, sellers in multiple states may be exposed to sales tax rules.

Review Question 2. (Please see page 54 of November JofA.) a. Incorrect. Trust fund taxes.b. Incorrect. Trust fund taxes.c. Incorrect. Trust fund taxes.d. Correct. Trust fund taxes.e. Incorrect. Trust fund taxes.

Review Question 3. (Please see page 54 of November JofA.) a. Correct. Sales tax is owed by the purchaser. The seller merely collects and remits.b. Incorrect. Sales tax is owed by the purchaser. The seller merely collects and remits.

Review Question 4. (Please see page 54 of November JofA.) a. Incorrect. This is part of, but not the most complete answer.b. Incorrect. This is part of, but not the most complete answer.c. Incorrect. This is part of, but not the most complete answer.d. Incorrect. This is part of, but not the most complete answer.e. Correct. Any of the above could be a responsible party.

Review Question 5. (Please see page 54 of November JofA.) a. Incorrect. A corporation will not shield an individual from the responsible person rules.b. Correct. A corporation will not shield an individual from the responsible person rules.

====================================== End of Section VII

Section VIII. Keep Clients Coming to You With PFP Services (Page 30)

Section VIII Assignment:1. Study the article (reference text) in the Journal of Accountancy, paying particular attention to our

Learning Objectives.2. Answer our Review Questions that have been designed to provide an interactive learning experience.3. Study the Solutions and Suggested Responses to the Review Questions.4. Answer Final Exam questions 41 through 45.

Section VIII Learning Objectives:1. Learn about evolving trends in the business of tax preparation and personal financial planning. 2. Learn how financial planning can enhance a tax practice.3. Learn why CPAs can have an advantage when it comes to financial planning.

Section VIII Review Questions:

1. There is a growing trend where U.S. Taxpayers are increasingly self-filing their own tax returns and CPAs are e-filing fewer. Comparing 2008 to 2018, self-filed individuals increased from 17.4% to 35.9% while individual tax returns e-filed by CPAs:a. Decreased from 35.9% to 17.4%.b. Decreased from 29.9% to 17.4%.c. Decreased from 59.0% to 29.9%.d. Decreased from 59.0% to 35.9%.e. Decreased from 70.1% to 59.0%.

2. Noting the decrease in individual income tax returns e-filed by CPAs, the author speculates:a. Older taxpayers are more increasingly not required to file, eliminating the need for a CPA.b. The new generation of taxpayers are taking longer to finish school, get a job and thus, the

need to file a tax return is delayed.c. Younger taxpayers are more comfortable with technology and more likely to self-prepare and

e-file.d. Younger taxpayers are getting married earlier in life and so instead of two single tax returns,

there are more “married filing jointly” tax returns, accounting for much of the decrease in returns filed by CPAs.

e. Low birth rates have resulted in fewer taxpayers to e-file.

3. A trend perhaps related to the decrease in the number of tax returns filed by CPAs is:a. The number of CPAs active in tax preparation continues to decline.b. The number of income tax returns prepared by the various IRS district offices continues to

increase.c. The number of income tax returns e-filed by “quick refund” pop-up locations is increasing.d. Some financial services firms have started preparing client's tax returns as part of their

service package.e. Young adults comfortable with technology are filing tax returns for parents and grandparents.

4. One reason a CPA in Portland, Oregon began offering financial planning services is:a. Tax clients were leaving at an alarming rate.b. Fees for investment management are very lucrative.c. The hourly rate for financial planning is double that for tax return preparation.d. Professional liability risk is much lower.e. Clients were asking questions related to financial planning, such as “When should I start

taking Social Security?”

5. CPAs can have an advantage in providing financial planning services because nearly every aspect involves:a. Detail calculations.b. Understanding complex financial concepts and forms.c. Tax implications.d. Filing government forms.e. Understanding complex investments, such as derivatives and hedge funds.

Section VIII Solutions and Suggested Responses to Review Questions appear on the next page.

Section VIII Solutions and Suggested Responses to Review Questions.

Review Question 1: (Please see page 31 of December JofA.) a. Incorrect. Individual returns filed by CPAs decreased from 70.1% to 59%.b. Incorrect. Individual returns filed by CPAs decreased from 70.1% to 59%.c. Incorrect. Individual returns filed by CPAs decreased from 70.1% to 59%.d. Incorrect. Individual returns filed by CPAs decreased from 70.1% to 59%.e. Correct. Individual returns filed by CPAs decreased from 70.1% to 59%.

Review Question 2: (Please page 31 of December JofA.)a. Incorrect. Younger taxpayers are more likely to self-prepare and e-file.b. Incorrect. Younger taxpayers are more likely to self-prepare and e-file.c. Correct. Younger taxpayers are more likely to self-prepare and e-file.d. Incorrect. Younger taxpayers are more likely to self-prepare and e-file.e. Incorrect. Younger taxpayers are more likely to self-prepare and e-file.

Review Question 3: (Please see page 31 of December JofA.)a. Incorrect. Financial services firms are preparing client's tax returns as part of their service package.b. Incorrect. Financial services firms are preparing client's tax returns as part of their service package.c. Incorrect. Financial services firms are preparing client's tax returns as part of their service package.d. Correct. Financial services firms are preparing client's tax returns as part of their service package.e. Incorrect. Financial services firms are preparing client's tax returns as part of their service package.

Review Question 4. (Please see pages 32 of December JofA.) a. Incorrect. Clients were asking financial planning questions, such as when to start Social Security.b. Incorrect. Clients were asking financial planning questions, such as when to start Social Security.c. Incorrect. Clients were asking financial planning questions, such as when to start Social Security.d. Incorrect. Clients were asking financial planning questions, such as when to start Social Security.e. Correct. Clients were asking financial planning questions, such as when to start Social Security.

Review Question 5: (Please page 33 of December JofA.) a. Incorrect. Tax implications.b. Incorrect. Tax implications.c. Correct. Tax implications.d. Incorrect. Tax implications.e. Incorrect. Tax implications.

====================================== End of Section VIII.

Section IX. What it Takes for Accounting Firms to Recruit Gen Z. (Page 36)

Section IX Assignment:1. Study the article (reference text) in the Journal of Accountancy, paying particular attention to our

Learning Objectives.2. Answer our Review Questions that have been designed to provide an interactive learning experience.3. Study the Solutions and Suggested Responses to the Review Questions.4. Answer Final Exam questions 46 through 50.

Section IX Learning Objectives:1. Learn some characteristics of Generation Z. 2. Learn what factors “Gen Zers” valued when considering firm internships .3. Consider how the authors' list of “do's and don'ts” could be useful not only in recruiting Gen

Zers, but in evaluating firm practices and culture.

Section IX Review Questions:

1. Individuals born from 1996 through 2010 are the:a. Greatest generation.b. Baby boomer generation.c. Generation X. d. Generation Y (Millennials).e. Generation Z (Gen Z).

2. Gen Zers, compared to prior generations, can be more entrepreneurial. For future employers:a. That is good news – they will work very hard and stick around.b. That could be good – they may help create new business opportunities.c. That is great news – every business owner wants employees who will work as if they owned

the business.d. It could be difficult “harnessing” that spirit, so turnover could be high.e. It won't matter, all employees are about the same, regardless of age.

3. To help understand some common characteristics of Gen Zers, the authors examined results of asurvey of accounting students who had been recruited for.a. Professional internships at local CPA firms.b. Full-times jobs at Big Four firms.c. Professional internships at CPA firms ranging from single-office to Big Four.d. Internships with a range of nonprofit entities and public interest think tanks.e. A controlled study on workplace age-related differences and its effects on problem-solving.

4. Interestingly, regardless of the size of firm students chose, one of the least important factors in their decision was:a. Culture.b. Compensation.c. Clientele.d. Technology.e. Location.

5. In open-ended questions participants noted some elements of positive experiences. What had an adverse effect on student's impressions?a. Small events with fewer candidates.b. Activity-based recruiting, such as a game.c. Negativity.d. Personal contact, such as emails or letters after an event.e. Too much communication before an event.

Section IX Solutions and Suggested Responses to Review Questions appear on the next page.

Section IX Solutions and Suggested Responses to Review Questions.

Review Question 1: (Please see page 37 of December JofA.) a. Incorrect. Generation Z (Gen Z).b. Incorrect. Generation Z (Gen Z).c. Incorrect. Generation Z (Gen Z).d. Incorrect. Generation Z (Gen Z).e. Correct. Generation Z (Gen Z).

Review Question 2: (Please page 37 of December JofA.) a. Incorrect. It could be difficult “harnessing” that spirit, so turnover could be high.b. Incorrect. It could be difficult “harnessing” that spirit, so turnover could be high.c. Incorrect. It could be difficult “harnessing” that spirit, so turnover could be high.d. Correct. It could be difficult “harnessing” that spirit, so turnover could be high.e. Incorrect. It could be difficult “harnessing” that spirit, so turnover could be high.

Review Question 3: (Please see page 38 of December JofA.)a. Incorrect. Professional internships at CPA firms ranging from single-office to Big Four.b. Incorrect. Professional internships at CPA firms ranging from single-office to Big Four.c. Correct. Professional internships at CPA firms ranging from single-office to Big Four.d. Incorrect. Professional internships at CPA firms ranging from single-office to Big Four.e. Incorrect. Professional internships at CPA firms ranging from single-office to Big Four.

Review Question 4. (Please see page 38 of December JofA.) a. Incorrect. Technology was of lessor importance in the students' decision.b. Incorrect. Technology was of lessor importance in the students' decision.c. Incorrect. Technology was of lessor importance in the students' decision.d. Correct. Technology was of lessor importance in the students' decision.e. Incorrect. Technology was of lessor importance in the students' decision.

Review Question 5: (Please page 39, 40 of December JofA.) a. Incorrect. Negativity, including arrogance and talking about other firms.b. Incorrect. Negativity, including arrogance and talking about other firms.c. Correct. Negativity, including arrogance and talking about other firms.d. Incorrect. Negativity, including arrogance and talking about other firms.e. Incorrect. Negativity, including arrogance and talking about other firms.

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