Section Review

These questions are designed to review the information in this section and test your knowledge of the key points. Select the appropriate answer to each of the following questions:

1. The program calculates shareholder percentages based on:

The number of shares entered for the 1st shareholder
The total number of shares entered for all shareholders
Percentage of common stock owned

2. The program carries the total officer compensation to Form 1120S, line7 and excludes any compensation for officers who are marked as:

Officer
Office and director
Director only

3. The program calculates the beginning balance of total retained earnings based on:

The beginning balance of total retained earnings
The beginning balance of shareholder basis
The beginning balance entries for Schedule M-2 accounts and other retained earnings

4. If you enter total distributions that are greater than the total of all Schedule M-2 accounts and Other Retained Earnings (if applicable), the program:

   Applies the excess amount to reduce Retained Earnings on Schedule L, line 24
   Reduces shareholder basis accounts
   Applies distributions against the available balances on the Balance Sheet

5. If the total K-1 allocated amounts are not equal to 100 percent, the program:

Allocates everything to the first shareholder
Prints a federal Schedule K/K-1 reconciliation worksheet
Makes an adjustment to restore debt basis

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