Multiple Choice
Which of the following types of accounts allows you to write checks from the account?
16
views
1. Introduction to Accounting
Types of Accounting
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
The wage base for which of the following taxes is capped?
A
State unemployment tax
B
Medicare tax
C
Social Security tax
D
Federal income tax
Verified step by step guidance1
Understand the concept of a 'wage base cap': A wage base cap refers to the maximum amount of earnings subject to a specific tax. Once an individual's earnings exceed this cap, no additional tax is levied on the excess earnings for that particular tax.
Identify the taxes listed in the problem: State unemployment tax, Medicare tax, Social Security tax, and Federal income tax.
Analyze each tax to determine if it has a wage base cap: Social Security tax has a wage base cap, meaning only earnings up to a certain limit are subject to this tax. Medicare tax does not have a wage base cap, as it applies to all earnings. Federal income tax is progressive and does not have a wage base cap. State unemployment tax may have a cap, but it varies by state.
Focus on Social Security tax: The Social Security tax is unique in that it has a federally established wage base cap, which is adjusted annually. Earnings above this cap are not subject to Social Security tax.
Conclude that the correct answer is Social Security tax, as it is the only tax among the options provided that is universally capped at a specific wage base.
4:10mWatch next
Master Types of Accounting: Financial and Managerial with a bite sized video explanation from Brian
Start learningRelated Videos
Related Practice
Types of Accounting practice set
Problem sets built by lead tutorsExpert video explanations