FREE Certified Interior Decorator Practice Questions and Answers
Which of the following are you required by law to notify when you begin trading?
Correct Answer: The Inland Revenue
You must notify The Inland Revenue as soon as you begin trading, per legal requirements. This is so because The Inland Revenue is responsible for tax collection and ensuring that tax laws are followed. You are abiding by your legal duty to report your income and pay the relevant taxes by telling them about your trading activities.
Which of the following describes the insurance policy that covers inventory, machinery, and similar items during delivery?
Correct Answer: Goods in transit insurance
Stock, equipment, and other items are covered by goods-in-transit insurance while they are being delivered or transported. This kind of insurance guards against potential theft, damage, or loss while the item is being transported. It is intended primarily to protect against the risks involved in transferring goods from one place to another. However, since they are unrelated to the transportation process, motor and employer liability insurance do not cover goods while in transit.
If the profits of sole traders exceed a predetermined threshold, which of the following will they be required to pay?
Please select 2 correct answers
Correct Answer: Class 2 National Insurance Contributions, Class 4 National Insurance Contributions
If a sole trader's profits exceed a predetermined threshold, they will be required to pay Class 2 and Class 4 National Insurance Contributions. Class 4 National Insurance Contributions are computed based on profits and are paid on profits over a predetermined threshold. Sole traders must pay Class 2 National Insurance Contributions, which are flat rate payments due if their profits exceed a predetermined threshold. Sole traders whose profits surpass the designated threshold are required to make both of these contributions.
Which of the following insurance types is most important for professionals like architects and solicitors?
Correct Answer: Professional indemnity insurance
Professionals like architects and solicitors primarily need professional indemnity insurance. This kind of insurance covers claims made against professionals for carelessness, mistakes, or omissions in their professional services. It shields experts from monetary damages and legal costs that could result from these lawsuits. Because of the nature of their work and the potential for severe consequences, professionals in these fields need professional indemnity insurance to protect their finances and reputation.
An independent trader's entire business revenue is considered personal income.
Correct Answer: FALSE
The claim is untrue since an independent trader's business revenue is not considered personal revenue. When it comes to a business, the revenue is distinct from the owner's revenue. The revenue from the company is regarded as a separate entity and is governed by laws about companies and taxes.
The company's employees pay income tax through the PAYE program.
Correct Answer: TRUE
The PAYE (Pay As You Earn) system requires company employees to pay income tax, so the statement is accurate. In other words, the employer takes the income tax out of the employee's paycheck and pays it straight to the government on their behalf. Employees can fulfill their tax obligations more easily thanks to the PAYE scheme, which guarantees timely and effective income tax collection.
With regard to sole traders, drawings are not an allowable expense.
Correct Answer: TRUE
When used about sole proprietors, drawings are funds or other assets that the owner removes from the company for personal use. Drawings cannot be subtracted from the business's taxable income since they are not considered expenses. Drawings are, therefore, not a legitimate expense for sole proprietors, as stated.