Test - Tax in Small Business: Introduction to Entities (2021) new updated exam

Test - Tax in Small Business: Introduction to Entities (2021) new updated exam Test - Tax in Small Business: Introduction to Entities (2021) Section 1 Question 1 of 10. Which of the following does not apply to an LLC? They are easy to form. They are limited to 100 members. They have limited liability. They can choose to be a pass-through entity. Mark for follow up Question 2 of 10. An individual who has decided to start a business on their own may generally choose from any of the following structure types, EXCEPT: Sole proprietorship. Partnership. C corporation. S corporation. Mark for follow up Question 3 of 10. Which of the following is an advantage of a sole proprietorship? The owner can and should receive payments in the form of a salary for their work. The owner cannot be held liable for business losses. It is easy to raise capital by selling shares to investors. The tax return is part of the owner's return. Question 1 of 10. A three-member LLC may choose to be taxed as any of the following, EXCEPT: Sole proprietorship. Partnership. C corporation. S corporation. Mark for follow up Question 2 of 10. Which of the following is a disadvantage of an S corporation? Self-employment tax must be paid on the business income. Interest in the S corporation may be transferred. It is limited to one class of stock. An S corporation is a pass-through entity and does not pay federal income tax at the entity level. Mark for follow up Section 2 Question 4 of 10. Which of the following may serve as a primary record-keeping system for small business expenses? Business checkbook. Business credit card statements and receipts. Summary of daily cash receipts. Fixed asset listing. Mark for follow up Question 5 of 10. A business must use a calendar tax year if the business: Does not keep books. Uses the cash method of accounting. Uses the accrual method of accounting. Has inventory. Question 4 of 10. All of the following are reasons for a business to keep accurate records, EXCEPT: Allows the business owner to monitor the progress of the business. Helps to complete the tax return. Helps avoid additional tax, penalties, and interest in the event of an audit. Business records needs to be included with the tax return when it's filed. Mark for follow up Which of the following is not an advantage of accounting software? It is widely available. Financial statements can be prepared at any time. The business owner does not have to provide proper documentation for expenses. It is relatively inexpensive. Mark for follow up Section 3 Question 6 of 10. A type of defined contribution plan with employee contributions for small businesses with fewer than 100 employees is called what? Simplified Employee Pension. Roth IRA. A defined benefit plan. Savings Incentive Match Plan for Employees (SIMPLE). Mark for follow up Question 7 of 10. Which of the following benefits is ineligible to be included in a cafeteria plan? Accident and health benefits (excluding Archer medical savings accounts). Adoption assistance. Educational assistance. Dependent care assistance. Question 6 of 10. Businesses may be subject to the Shared Responsibility Payment from the IRS when not offering insurance that meets certain minimum standards. This impacts businesses with at least how many full-time employees or full-time equivalent employees? 100. 50. 25. 10. Mark for follow up Section 4 Question 8 of 10. All of the following statements are true regarding excise tax, EXCEPT: All excise tax is collected quarterly, paid and reported on Form 720, Quarterly Federal Excise Tax Return. Excise taxes are due on activities, such as transportation and communications. Registration is required for some excise tax activities. Excise taxes may be a fixed dollar amount or a percentage of the cost of the product or service. Mark for follow up Question 9 of 10. Which of the following taxes is not collected or deducted from the employee's wages? Social security tax. Federal income tax. Unemployment taxes (FUTA). Medicare tax. Mark for follow up Question 10 of 10. Generally, federal unemployment taxes (FUTA) are paid quarterly. Which of the following statements accurately describes the exception to this rule? If quarterly FUTA tax liability is $500 or less, it may be carried forward and added to the next quarter. If the total FUTA liability for the year is $500 or less, it can be remitted with the annual return. If a company has more than 500 employees, FUTA is due monthly. If a company has fewer than 50 employees, FUTA is due annually. Companies with a fiscal year ending other than on December 31 are required to remit FUTA payments every other month. Question 10 of 10. Except for farmers, fishers, certain household employers, and certain high-income taxpayers, estimated tax payments should be: 100% of the tax estimated to be shown on the current year's return or 90% of the tax shown on the previous year's return. 90% of the tax estimated to be shown on the current year's return or 100% of the tax shown on the previous year's return. The amount of the self-employment tax on the net profit of the business. The amount of the self-employment tax on the gross profit of the business. Mark for follow up Question 8 of 10. Which of the following is true regarding sales tax? Sales tax is collected and paid when the business files their income tax return. Sales tax is only collected for sales in the state where the business operates. Sales tax has a tax form that may be used for any location where the business operates. Sales tax may need to be collected and paid for every location where sales are made.