Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Useful Information

Financial Accounting

1. Introduction to Accounting

Useful Information

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Multiple Choice

Which of the following statements correctly describes the amount of the self-employment tax (SECA) and its comparison to FICA taxes for employees?

SECA tax rate is 7.65%, which is the same as the employee portion of FICA taxes.

SECA tax rate is 12.4%, which is higher than the total FICA tax rate.

SECA tax rate is 15.3%, which is equal to the combined employer and employee FICA rates.

SECA tax rate is 6.2%, which is the same as the employer portion of FICA taxes.

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Verified step by step guidance

Understand the concept of SECA (Self-Employment Contributions Act) tax: SECA tax is a tax paid by self-employed individuals to cover Social Security and Medicare contributions. Unlike employees who share these taxes with their employers, self-employed individuals pay the full amount themselves.

Compare SECA tax to FICA (Federal Insurance Contributions Act) taxes: FICA taxes are split between the employer and employee, with each paying 7.65% (6.2% for Social Security and 1.45% for Medicare). For self-employed individuals, SECA tax combines both portions, resulting in a total rate of 15.3%.

Break down the SECA tax rate: The SECA tax rate consists of 12.4% for Social Security and 2.9% for Medicare, which matches the combined employer and employee FICA rates.

Clarify the difference between SECA and FICA: While FICA taxes are shared between employers and employees, SECA taxes require self-employed individuals to pay the full amount, making the SECA tax rate higher than the individual FICA rate but equal to the combined FICA rate.

Review the correct statement: The correct description of SECA tax is that its rate is 15.3%, which is equal to the combined employer and employee FICA rates. This reflects the self-employed individual's responsibility to cover both portions of Social Security and Medicare taxes.