Small Business Tax Quiz ( WITH ALL CORRECT ANSWERS SHOWN )

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Payments of ___________ or more for services performed for a business by individuals not treated as employees, (such as independent contractors) must be issued a 1099-NEC. Recipients of 1099-NEC may... need to file a Schedule C. Select one: a. $10 b. $60 c. $600 Correct. The correct answer is C. An employer may issue a 1099- NEC for any dollar amount, but must issue a 1099-NEC to an individual for services performed by that individual when the dollar amount totals $600 or more for the year. d. $400 Feedback The answer is found in the What is an Independent Contractor chapter. The correct answer is: $600 Question 2 Correct Flag question Question text Payments of ___________ or more for royalty payments must be issued a 1099-MISC. Select one: a. $10 Correct. The correct answer is A. An employer may issue a 1099MISC for any dollar amount, but must issue a 1099MISC for royalty payments when the dollar amount totals $10 or more for the year. b. $60 c. $600 d. $400 Feedback The answer is found in the What is an Independent Contractor chapter. The correct answer is: $10Question 3 Correct Flag question Question text Social Security, Medicare and income taxes withheld for an individual, by an employer, are reported on Form _____ to the individual. Select one: a. W-2 Correct. The correct answer is A. Form W-2 is completed and provided to an individual to provide, in part, information on social security, Medicare and income tax withholdings. b. SE c. 1040-ES d. 940 Feedback The answer is found in The Business Owner and Employees chapter. The correct answer is: W-2 Question 4 Correct Flag question Question text If an individual has employees, they will need to file forms to report employment taxes. Employment taxes include the following items. Select one: a. Social security and Medicare taxes b. Federal income tax withholding c. Federal unemployment (FUTA) tax d. All of the above are correct Correct. The correct answer is D. The last day of February is the due date for filing W-2s if not filed electronically. March 31 (or next business day) is the due date for electronically filed W- 2s. Feedback The answer is found in The Business Owner and Employees chapter. The correct answer is: All of the above are correct Question 5 CorrectFlag question Question text Which of the following scenarios properly accounts for what will be considered taxable business income? Select one: a. Jan is a CPA and a client pays for Jan's services in shares of stock in their (the client's) company. Jan includes in income the value of her services as if she had been paid in cash b. Amy is an artist and provided some of her artwork to her landlord in lieu of paying for her office rent. She includes in her income the value of her artwork as determined by her c. Jan is a CPA and a client pays for Jan's services in shares of stock in their (the client's) company. Jan includes in income the fair market value of the stock she received Correct. The correct answer is C. This represents the best valuation for determining the compensation Jan received for her services. d. Amy is an artist and provided some of her artwork to her landlord in lieu of paying for her office rent. She includes in her income the cost of the materials used in completing the artwork Feedback The answer is found in the Business Income chapter. The correct answer is: Jan is a CPA and a client pays for Jan's services in shares of stock in their (the client's) company. Jan includes in income the fair market value of the stock she received Question 6 Correct Flag question Question text Labor costs are usually a component of cost of goods sold in the following industries: Select one: a. Small durable goods retailers b. Manufacturing or mining businesses Correct. The correct answer is B. Manufacturing and mining businesses normally would have a cost of goods sold component and associated labor costs because these industries are producing or extracting goods or resources. c. Fast food restaurants d. All of the above usually include labor costs as a component of cost ofgoods sold. Feedback The answer is found in the Business Expenses chapter. The correct answer is: Manufacturing or mining businesses Question 7 Incorrect Flag question Question text Tim Sol used the actual expense method for determining his car and truck expenses for the tax year. Tim deducts depreciation and actual expenses for gas, oil, repairs and insurance. The vehicle is used 85% for business purposes. Tim paid a total of $2,400 for oil and gas, $800 for vehicle repairs and $1,200 for insurance. Not including depreciation, Tim can take actual expenses of: Select one: a. $4,400 Incorrect. The correct answer is B. $4,400 are the total expenses. The vehicle is used 85% for business purposes, therefore 85% of the total expenses can be deducted as business expenses or $3,740. b. $3,740 c. $3,470 d. $2,400 Feedback The answer is found in the Business Expenses chapter. The correct answer is: $3,740 Question 8 Correct Flag question Question text The formula for calculating cost of goods sold is: Select one: a. [Ending Inventory] + [Purchases] - [Beginning Inventory] b. [Beginning Inventory] + [Purchases] - [Ending Inventory] Correct. The correct answer is B. The correct answer is [Beginning Inventory] + [Purchases] - [Ending Inventory]. Cost of Goods Sold [COGS] is subtracted from Gross Revenue (or Gross Receipts) to determine Gross Profit. c. [Beginning Purchases] + [Ending Purchases] - [Ending Inventory]d. [Beginning Purchases] - [Ending Purchases] - [Beginning Inventory] Feedback The answer is found in the Business Expenses chapter. The correct answer is: [Beginning Inventory] + [Purchases] - [Ending Inventory] Question 9 Incorrect Flag question Question text Which of the following are factors that will determine the deductibility of health insurance premiums for businesses? Select one: a. An individual can only claim the health insurance premiums write-off for months when neither them nor their spouse was eligible to participate in an employer-subsidized health plan b. The deduction must exceed the earned income collected from the taxpayer's business c. Eligibility to take the deduction is determined on an annual basis d. Only A and B above are correct factors Incorrect. The correct answer is A. Feedback The answer is found in the Business Expenses chapter. The correct answer is: An individual can only claim the health insurance premiums write-off for months when neither them nor their spouse was eligible to participate in an employer-subsidized health plan Question 10 Correct Flag question Question text Generally, who is not required to pay Self Employment (SE) tax? Select one: a. An individual who is self-employed as a sole proprietor or independent contractor and has net earnings total less than $400. Correct. The correct answer is A. If net earnings total less than $400 then Schedule SE does not need to be filed and there will be no SE tax. b. Self-employed residents of the Virgin Islands, Puerto Rico, Guam, theCommonwealth of the Northern Mariana Islands, or American Samoa. c. An individual who is self-employed as a sole proprietor or independent contractor and their net earnings total $108.28 or more. d. All self-employed individuals are subject to the SE tax as long as they file a Schedule C or C-EZ [Show More]

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