US Tax Accounting Flashcards
6 cards from real Accounting Online Program practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 US Tax Accounting flashcards as text
Which federal agency administers the US tax code?
Answer: IRS
The Internal Revenue Service (IRS) is the US federal agency responsible for collecting taxes and administering the Internal Revenue Code.
For federal income tax purposes, what is the standard deduction?
Answer: A fixed dollar amount taxpayers can deduct without itemizing
The standard deduction is a fixed amount set by the IRS that reduces taxable income for taxpayers who choose not to itemize deductions.
Which of the following is an example of a tax deduction?
Answer: Mortgage interest deduction
The mortgage interest deduction reduces taxable income (not the tax owed directly), whereas credits reduce the actual tax liability.
What is the tax treatment of a long-term capital gain under US federal law?
Answer: Taxed at preferential (lower) rates of 0%, 15%, or 20%
Long-term capital gains (assets held more than one year) are taxed at preferential rates of 0%, 15%, or 20% depending on taxable income.
What does FICA stand for in US payroll tax accounting?
Answer: Federal Insurance Contributions Act
FICA stands for the Federal Insurance Contributions Act and funds Social Security and Medicare through payroll taxes split between employer and employee.
Which accounting method is generally required for businesses with average annual gross receipts exceeding $30 million?
Answer: Accrual method
The IRS generally requires larger businesses (exceeding the gross receipts threshold) to use the accrual method, which matches income and expenses to the period they occur.