1. When creating a year-end close calendar, what is the best practice for establishing dates and timelines?

A) Start from the first business day of January and map forward 5 business days.

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B) Build the internal close calendar backward from downstream tax and bank deadlines.

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C) Wait until the final bank statements arrive in January before setting any deadlines.

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D) Schedule all deliverables based solely on the client's initial preference.

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2. Prior to closing December, why is it critical to tie out the entire opening balance sheet to last year’s filed return or audited financial statements?

A) To calculate the current year's interest accruals.

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B) To issue 1099s to vendors on time.

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C) Because everything downstream of an unverified opening balance is unreliable.

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D) To determine whether the client needs to reclassify merchant processor fees.

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3. During the W-3 to Form 941 reconciliation for Infinite Possibilities Inc., a $3,200 gap was discovered. What caused this variance?

A) An unpaid PTO accrual for an employee raise.

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B) Personal use of a company automobile that was omitted from payroll.

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C) An out-of-system manual check written directly to an employee that bypassed payroll.

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D) An over-calculated retirement match true-up.

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4. What is the recommended accounting treatment when a client’s net bank deposits are recorded instead of gross sales from a merchant card processor?

A) Reduce gross revenue by the amount of the deposits.

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B) Record revenue at the gross figure and reclassify the missing difference as merchant fees expense.

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C) Request an amended 1099-K directly from the merchant card processor.

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D) Credit bad debt expense to offset the unrecorded processing fees.

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5. What taxable consequence occurs when an S-Corp or pass-through entity owner takes distributions that exceed their tax basis in the company?

A) The excess distribution is treated as a tax-free return of capital.

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B) The excess distribution is added directly to employee W-2 wages.

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C) The excess distribution is generally treated as a taxable capital gain event.

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D) The excess distribution must be recorded as an intangible asset amortization fee.

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Year-End Close

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