IAB Taxation & Compliance 3

Question 1

A corporation has $500,000 in taxable income. What is the federal corporate income tax rate applied under the Tax Cuts and Jobs Act?

Accepted Answer

21%

Answer

The Tax Cuts and Jobs Act of 2017 established a flat 21% federal corporate income tax rate effective 2018.

Question 2

A sole proprietor must pay estimated taxes if they expect to owe at least how much in federal tax for the year?

Accepted Answer

$1,000

Answer

Individuals, including sole proprietors, must make estimated tax payments if they expect to owe at least $1,000 in federal taxes.

Question 3

Which accounting method requires matching revenues with the expenses incurred to generate them?

Accepted Answer

Accrual basis

Answer

The accrual basis recognizes revenues and expenses when earned or incurred, matching them in the same accounting period.

Question 4

Sales tax collected from customers should be recorded as:

Accepted Answer

A liability

Answer

Sales tax collected is a liability because the business holds it temporarily before remitting it to the state taxing authority.

Question 5

The federal unemployment tax (FUTA) rate is 6.0% on the first $7,000 of wages. The maximum credit against FUTA for timely state unemployment tax payments is:

Accepted Answer

5.4%

Answer

Employers who timely pay state unemployment taxes receive a maximum 5.4% credit, reducing the net FUTA rate to 0.6%.

(IAB) International Association of Bookkeepers Certification Practice Test

(IAB) International Association of Bookkeepers Certification Practice Test

IAB Taxation & Compliance 3