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TAX PREPARER FINAL EXAM REVIEW ||VERIFIED
EXAM!!|| MOST RECENT EXAM 2026/2027 ACTUAL
COMPLETE REAL EXAM QUESTIONS AND CORRECT
ANSWERS (VERIFIED ANSWERS) ALREADY GRADED
A+ || NEWEST EXAM!!!
What are returns and allowances? - Answer-• Amounts
that were refunded to customers who returned
merchandise for refund or partial refund.
• These amounts are subtracted from gross receipts.
(15.6)
How is cost of goods sold determined? - Answer-
Beginning inventory plus purchases, plus labor, supplies,
depreciation, etc. attributable to product manufacture or
preparation for sale, minus ending inventory. (15.7)
If the client has contract labor, what should you remind the
client that they should do? - Answer-• Provide a Form
1099-MISC to any independent contractor who worked
and earned $600 or more. (15.9)
What is the purpose of self-employment tax? - Answer-To
pay social security and medicare taxes. (15.14)
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What amounts does a proprietor have "at risk"? - Answer-
Amounts invested in the business plus any business debts
for which the proprietor is personally liable. (15.16)
What difference does it make if the proprietor is "at risk" or
not? - Answer-Only amounts at risk may be used to
determine the actual loss on Schedule C. (15.16)
How does a Tax Professional meet due diligence
requirements? - Answer-• Tax Professionals fulfill due
diligence requirements by making every effort to prepare
accurate and complete returns.
• Tax Professionals must have knowledge of tax law, and
apply a reasonability check to the information provided by
their clients. (26.1)
What is a thorough interview? - Answer-A thorough
interview consists of asking general information questions,
then asking additional questions whenever information is
incomplete or seems inaccurate or inconsistent. (26.2)
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What is a conflict of interest? - Answer-A conflict of interest
is when one's situation might benefit at the expense of
another's situation. (26.3)
What actions can resolve a conflict of interest? - Answer-A
conflict of interest is resolved when it is acknowledged,
disclosed to all parties, and the parties have consented to
waiving the conflict. (26.3)
What client information is confidential? - Answer-Any
information that could potentially identify the client is
confidential.
Information includes (but is not limited to):
• Name
• Address and phone number
• Social security numbers
• Place of employment
• Any information from a tax return (26.4)
Is it acceptable for a Tax Professional to leave a detailed
phone message for a client, letting them know their tax
return is complete? - Answer-• Tax Professionals must
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have prior consent from the client to leave phone
messages related to their tax return.
• The fact that a taxpayer is the client of a Tax Professional
or tax preparation business is confidential information that
must not be disclosed. (26.5)
What is a Tax Professional's responsibility upon finding out
that a client has not complied with any tax law? - Answer-A
Tax Professional must advise the client of the
noncompliance and the consequences for not correcting
the situation. (26.7)
What action should a Tax Professional take if a client
insists on reporting information that is inaccurate? -
Answer-A Tax Professional should never prepare a return
that contains inaccurate information. (26.7)
If the employee thinks his Form W-2 is not correct, what
should he do? - Answer-• If the name or social security
number is incorrect, the taxpayer may change it himself
and need not obtain a corrected W-2 before filing his tax
return.
• The employer should be notified of the error and asked
to update his records.
TAX PREPARER FINAL EXAM REVIEW ||VERIFIED
EXAM!!|| MOST RECENT EXAM 2026/2027 ACTUAL
COMPLETE REAL EXAM QUESTIONS AND CORRECT
ANSWERS (VERIFIED ANSWERS) ALREADY GRADED
A+ || NEWEST EXAM!!!
What are returns and allowances? - Answer-• Amounts
that were refunded to customers who returned
merchandise for refund or partial refund.
• These amounts are subtracted from gross receipts.
(15.6)
How is cost of goods sold determined? - Answer-
Beginning inventory plus purchases, plus labor, supplies,
depreciation, etc. attributable to product manufacture or
preparation for sale, minus ending inventory. (15.7)
If the client has contract labor, what should you remind the
client that they should do? - Answer-• Provide a Form
1099-MISC to any independent contractor who worked
and earned $600 or more. (15.9)
What is the purpose of self-employment tax? - Answer-To
pay social security and medicare taxes. (15.14)
,2|Page
What amounts does a proprietor have "at risk"? - Answer-
Amounts invested in the business plus any business debts
for which the proprietor is personally liable. (15.16)
What difference does it make if the proprietor is "at risk" or
not? - Answer-Only amounts at risk may be used to
determine the actual loss on Schedule C. (15.16)
How does a Tax Professional meet due diligence
requirements? - Answer-• Tax Professionals fulfill due
diligence requirements by making every effort to prepare
accurate and complete returns.
• Tax Professionals must have knowledge of tax law, and
apply a reasonability check to the information provided by
their clients. (26.1)
What is a thorough interview? - Answer-A thorough
interview consists of asking general information questions,
then asking additional questions whenever information is
incomplete or seems inaccurate or inconsistent. (26.2)
,3|Page
What is a conflict of interest? - Answer-A conflict of interest
is when one's situation might benefit at the expense of
another's situation. (26.3)
What actions can resolve a conflict of interest? - Answer-A
conflict of interest is resolved when it is acknowledged,
disclosed to all parties, and the parties have consented to
waiving the conflict. (26.3)
What client information is confidential? - Answer-Any
information that could potentially identify the client is
confidential.
Information includes (but is not limited to):
• Name
• Address and phone number
• Social security numbers
• Place of employment
• Any information from a tax return (26.4)
Is it acceptable for a Tax Professional to leave a detailed
phone message for a client, letting them know their tax
return is complete? - Answer-• Tax Professionals must
, 4|Page
have prior consent from the client to leave phone
messages related to their tax return.
• The fact that a taxpayer is the client of a Tax Professional
or tax preparation business is confidential information that
must not be disclosed. (26.5)
What is a Tax Professional's responsibility upon finding out
that a client has not complied with any tax law? - Answer-A
Tax Professional must advise the client of the
noncompliance and the consequences for not correcting
the situation. (26.7)
What action should a Tax Professional take if a client
insists on reporting information that is inaccurate? -
Answer-A Tax Professional should never prepare a return
that contains inaccurate information. (26.7)
If the employee thinks his Form W-2 is not correct, what
should he do? - Answer-• If the name or social security
number is incorrect, the taxpayer may change it himself
and need not obtain a corrected W-2 before filing his tax
return.
• The employer should be notified of the error and asked
to update his records.
