HRB-27 Final Exam (H&R Block 27 Final Exam)
Questions With Correct Answers Latest Update
2026/2027 | 100% Pass.
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Terms in this set (125)
What income reporting form should Form 1099-MISC (15.6)
an independent contractor
sometimes receive from the person
who paid him for his services?
Schedule C, Line F asks for the • Under the accrual method, total sales and total
accounting method used in the charges for services are included in income even
business. though payment may be received in another tax
What is the difference between the year.
cash method and the accrual • Under the cash method, only income actually
method of accounting? received or expenses actually paid during the year
are included. (15.5)
What does it mean if a proprietor He is active in running the business in a substantial
"materially participates" in the way on a day-to-day basis. (15.5)
business?
Why is it important to know whether If the proprietor does not materially participate,
or not the proprietor materially any loss from the business is a passive loss and
participates? generally may be currently deducted only against
passive income. (15.6)
,What are returns and allowances? • 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 Beginning inventory plus purchases, plus labor,
determined? supplies, depreciation, etc. attributable to product
manufacture or preparation for sale, minus ending
inventory. (15.7)
If the client has contract labor, what • Provide a Form 1099-MISC to any independent
should you remind the client that contractor who worked and earned $600 or more.
they should do? (15.9)
What is the purpose of self- To pay social security and medicare taxes. (15.14)
employment tax?
What amounts does a proprietor Amounts invested in the business plus any business
have "at risk"? debts for which the proprietor is personally liable.
(15.16)
What difference does it make if the Only amounts at risk may be used to determine the
proprietor is "at risk" or not? actual loss on Schedule C. (15.16)
How does a Tax Professional meet • Tax Professionals fulfill due diligence
due diligence requirements? 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? A thorough interview consists of asking general
information questions, then asking additional
questions whenever information is incomplete or
seems inaccurate or inconsistent. (26.2)
What is a conflict of interest? 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 A conflict of interest is resolved when it is
of interest? acknowledged, disclosed to all parties, and the
parties have consented to waiving the conflict.
(26.3)
What client information is Any information that could potentially identify the
confidential? 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 • Tax Professionals must have prior consent from
to leave a detailed phone message the client to leave phone messages related to their
for a client, letting them know their tax return.
tax return is complete? • 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 A Tax Professional must advise the client of the
responsibility upon finding out that a noncompliance and the consequences for not
client has not complied with any tax correcting the situation. (26.7)
law?
Questions With Correct Answers Latest Update
2026/2027 | 100% Pass.
Save
Terms in this set (125)
What income reporting form should Form 1099-MISC (15.6)
an independent contractor
sometimes receive from the person
who paid him for his services?
Schedule C, Line F asks for the • Under the accrual method, total sales and total
accounting method used in the charges for services are included in income even
business. though payment may be received in another tax
What is the difference between the year.
cash method and the accrual • Under the cash method, only income actually
method of accounting? received or expenses actually paid during the year
are included. (15.5)
What does it mean if a proprietor He is active in running the business in a substantial
"materially participates" in the way on a day-to-day basis. (15.5)
business?
Why is it important to know whether If the proprietor does not materially participate,
or not the proprietor materially any loss from the business is a passive loss and
participates? generally may be currently deducted only against
passive income. (15.6)
,What are returns and allowances? • 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 Beginning inventory plus purchases, plus labor,
determined? supplies, depreciation, etc. attributable to product
manufacture or preparation for sale, minus ending
inventory. (15.7)
If the client has contract labor, what • Provide a Form 1099-MISC to any independent
should you remind the client that contractor who worked and earned $600 or more.
they should do? (15.9)
What is the purpose of self- To pay social security and medicare taxes. (15.14)
employment tax?
What amounts does a proprietor Amounts invested in the business plus any business
have "at risk"? debts for which the proprietor is personally liable.
(15.16)
What difference does it make if the Only amounts at risk may be used to determine the
proprietor is "at risk" or not? actual loss on Schedule C. (15.16)
How does a Tax Professional meet • Tax Professionals fulfill due diligence
due diligence requirements? 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? A thorough interview consists of asking general
information questions, then asking additional
questions whenever information is incomplete or
seems inaccurate or inconsistent. (26.2)
What is a conflict of interest? 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 A conflict of interest is resolved when it is
of interest? acknowledged, disclosed to all parties, and the
parties have consented to waiving the conflict.
(26.3)
What client information is Any information that could potentially identify the
confidential? 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 • Tax Professionals must have prior consent from
to leave a detailed phone message the client to leave phone messages related to their
for a client, letting them know their tax return.
tax return is complete? • 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 A Tax Professional must advise the client of the
responsibility upon finding out that a noncompliance and the consequences for not
client has not complied with any tax correcting the situation. (26.7)
law?
