Question 1

To establish a partnership, the partners must first obtain a partnership charter from the state.

Accepted Answer

A) True 
 B)False  False

Question 2

The income of a "limited liability corporation" is treated for tax purposes similarly to partnership income, and is not subject to double taxation.

Accepted Answer

A) True 
 B)False  True

Question 3

Based on IRS statistics, the most common type of business in the U.S. is

Accepted Answer

A)  Proprietorship 
B)  Partnership 
C)  Regular C corporation 
D)  Subchapter S corporation 
A)  Proprietorship 
B)  Partnership 
C)  Regular C corporation 
D)  Subchapter S corporation A

Question 4

Which of the following statements about social security taxes is correct?

Accepted Answer

A)  People who work as independent contractors do not have to pay any social security taxes. 
B)  An employer must withhold some money for these taxes from each employee's pay, but there is no actual payroll tax expense for the employer. 
C)  An employer must pay a payroll tax, but there is no tax that is paid by the employees. 
D)  There is both a social security tax withheld from the employees' pay, and a related payroll tax paid by the employer. 
A)  People who work as independent contractors do not have to pay any social security taxes. 
B)  An employer must withhold some money for these taxes from each employee's pay, but there is no actual payroll tax expense for the employer. 
C)  An employer must pay a payroll tax, but there is no tax that is paid by the employees. 
D)  There is both a social security tax withheld from the employees' pay, and a related payroll tax paid by the employer.

Question 5

One of the advantages of a proprietorship is that the business assets are legally separate from the owner's assets for all purposes.

Accepted Answer

A) True 
 B)False

Question 6

Both LLCs and Subchapter S companies are "pass-through" entities, whose owners have only "limited liability" for the business's obligations.

Accepted Answer

A) True 
 B)False

Question 7

One of the advantages of a partnership is:

Accepted Answer

A)  Unlimited liability of partners for the debts of the partnership 
B)  Avoiding double taxation of business profits 
C)  The business has an indefinite life, not related to the lives of the partners. 
D)  It is easy for a partner to sell his or her interests without the permission of other owners. 
A)  Unlimited liability of partners for the debts of the partnership 
B)  Avoiding double taxation of business profits 
C)  The business has an indefinite life, not related to the lives of the partners. 
D)  It is easy for a partner to sell his or her interests without the permission of other owners.

Question 8

Which of the following methods of financing increases the financial leverage of the business?

Accepted Answer

A)  Sales of common stock by a C corporation 
B)  Sales of bonds by a C corporation 
C)  Sales of additional partnership interests by a general partnership 
D)  Reinvestment of income earned in the year by a general partnership 
A)  Sales of common stock by a C corporation 
B)  Sales of bonds by a C corporation 
C)  Sales of additional partnership interests by a general partnership 
D)  Reinvestment of income earned in the year by a general partnership

Question 9

Explain in general terms what the rules are for deciding if a person who does work for a company is an employee or an independent contractor.

Accepted Answer

The rules for determining if a person is

Question 10

An advantage of financing using debt over equity financing is that interest is tax deductible.

Accepted Answer

A) True 
 B)False

Question 11

One of the advantages of a partnership is it is easy to set up.

Accepted Answer

A) True 
 B)False

Question 12

The income of a Subchapter S corporation is subject to "double taxation," once as the income is earned by the corporation, and once as the earnings are distributed to shareholders.

Accepted Answer

A) True 
 B)False

Question 13

The partners of a partnership have only "limited liability" for partnership debts.

Accepted Answer

A) True 
 B)False

Question 14

An advantage of the corporate form of business over a general partnership is:

Accepted Answer

A)  The business will last indefinitely, and its life is not tied to that of the owners. 
B)  Shareholders have unlimited liability for business debts. 
C)  Corporations are easier to form than partnerships. 
D)  Corporations avoid the "double taxation" that exists for partnership income. 
A)  The business will last indefinitely, and its life is not tied to that of the owners. 
B)  Shareholders have unlimited liability for business debts. 
C)  Corporations are easier to form than partnerships. 
D)  Corporations avoid the "double taxation" that exists for partnership income.

Question 15

A primary disadvantage of the corporate form of business, compared to a general partnership, is

Accepted Answer

A)  The indefinite life of the corporation, not tied to the lives of the owners 
B)  Greater difficulty in transferring ownership interests 
C)  Unlimited liability of shareholders for corporate liabilities 
D)  Double taxation of corporate profits 
A)  The indefinite life of the corporation, not tied to the lives of the owners 
B)  Greater difficulty in transferring ownership interests 
C)  Unlimited liability of shareholders for corporate liabilities 
D)  Double taxation of corporate profits

Question 16

Owners of LLCs have limited liability for the business's debts.

Accepted Answer

A) True 
 B)False

Question 17

"Commercial paper" is a form of company debt that usually has relatively short maturity periods.

Accepted Answer

A) True 
 B)False

Question 18

Only very large, international companies have more than a single class of stock.

Accepted Answer

A) True 
 B)False

Question 19

An advantage of a partnership over a C corporation is that there is no "double taxation" of partnership income.

Accepted Answer

A) True 
 B)False

Question 20

If someone works for the company as an independent contractor, the company has no obligation to report the amount paid to the IRS.

Accepted Answer

A) True 
 B)False

To establish a partnership, the partners must first obtain a partnership charter from the state.

The income of a "limited liability corporation" is treated for tax purposes similarly to partnership income, and is not subject to double taxation.

Based on IRS statistics, the most common type of business in the U.S. is

Which of the following statements about social security taxes is correct?

One of the advantages of a proprietorship is that the business assets are legally separate from the owner's assets for all purposes.

Both LLCs and Subchapter S companies are "pass-through" entities, whose owners have only "limited liability" for the business's obligations.

One of the advantages of a partnership is:

Which of the following methods of financing increases the financial leverage of the business?

Explain in general terms what the rules are for deciding if a person who does work for a company is an employee or an independent contractor.

An advantage of financing using debt over equity financing is that interest is tax deductible.

One of the advantages of a partnership is it is easy to set up.

The income of a Subchapter S corporation is subject to "double taxation," once as the income is earned by the corporation, and once as the earnings are distributed to shareholders.

The partners of a partnership have only "limited liability" for partnership debts.

An advantage of the corporate form of business over a general partnership is:

A primary disadvantage of the corporate form of business, compared to a general partnership, is

Owners of LLCs have limited liability for the business's debts.

"Commercial paper" is a form of company debt that usually has relatively short maturity periods.

Only very large, international companies have more than a single class of stock.

An advantage of a partnership over a C corporation is that there is no "double taxation" of partnership income.

If someone works for the company as an independent contractor, the company has no obligation to report the amount paid to the IRS.

How Accounting Works

Selecting Your Business Structure

Choosing Accounting Software

Managing Your Accounts

Accounting for Inventory

Doing Business Day to Day

Tackling the General Ledger

Reconciling Bank and Credit Card Statements

Setting up New Team Members

Understanding Insurance

Other Benefits and Reimbursements

Appendix

Filters

Exam 12: Payroll Taxes

To establish a partnership, the partners must first obtain a partnership charter from the state.

The income of a "limited liability corporation" is treated for tax purposes similarly to partnership income, and is not subject to double taxation.

Based on IRS statistics, the most common type of business in the U.S. is

Which of the following statements about social security taxes is correct?

One of the advantages of a proprietorship is that the business assets are legally separate from the owner's assets for all purposes.

Both LLCs and Subchapter S companies are "pass-through" entities, whose owners have only "limited liability" for the business's obligations.

One of the advantages of a partnership is:

Which of the following methods of financing increases the financial leverage of the business?

Explain in general terms what the rules are for deciding if a person who does work for a company is an employee or an independent contractor.

An advantage of financing using debt over equity financing is that interest is tax deductible.

One of the advantages of a partnership is it is easy to set up.

The income of a Subchapter S corporation is subject to "double taxation," once as the income is earned by the corporation, and once as the earnings are distributed to shareholders.

The partners of a partnership have only "limited liability" for partnership debts.

An advantage of the corporate form of business over a general partnership is:

A primary disadvantage of the corporate form of business, compared to a general partnership, is

Owners of LLCs have limited liability for the business's debts.

"Commercial paper" is a form of company debt that usually has relatively short maturity periods.

Only very large, international companies have more than a single class of stock.

An advantage of a partnership over a C corporation is that there is no "double taxation" of partnership income.

If someone works for the company as an independent contractor, the company has no obligation to report the amount paid to the IRS.

How Accounting Works

Selecting Your Business Structure

Choosing Accounting Software

Managing Your Accounts

Accounting for Inventory

Doing Business Day to Day

Tackling the General Ledger

Reconciling Bank and Credit Card Statements

Setting up New Team Members

Understanding Insurance

Other Benefits and Reimbursements

Appendix

Filters