Multiple Choice
Which of the following best describes how recordkeeping helps in accounting?
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1. Introduction to Accounting
Types of Accounting
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Self-employment tax represents all of the following types of taxes, except:
A
Federal income tax
B
Both Social Security and Medicare taxes
C
Medicare tax
D
Social Security tax
Verified step by step guidance1
Understand the concept of self-employment tax: Self-employment tax is a tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves. It is similar to the payroll taxes withheld from the pay of most employees.
Identify the components of self-employment tax: Self-employment tax includes both Social Security tax and Medicare tax. These are mandatory contributions for self-employed individuals to fund retirement, disability, and healthcare benefits.
Clarify what is not included: Federal income tax is separate from self-employment tax. While self-employed individuals are responsible for paying federal income tax, it is not considered part of the self-employment tax.
Review the options provided: The options include Federal income tax, Social Security tax, Medicare tax, and both Social Security and Medicare taxes. Based on the definition of self-employment tax, only Social Security and Medicare taxes are included.
Conclude the correct answer: The type of tax that is not part of self-employment tax is Federal income tax, as it is a separate tax obligation.
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