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

9. Current Liabilities

Types of Liabilities

Financial Accounting

9. Current Liabilities

Types of Liabilities

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Multiple Choice

Which of the following is NOT subject to the Medicare contribution tax?

Rental income from real estate

Wages from employment

Municipal bond interest income

Net investment income from stocks

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Verified step by step guidance

Understand the Medicare contribution tax: This tax applies to certain types of income, including wages, rental income, and net investment income. It is designed to fund Medicare and is typically levied on high-income earners.

Review the types of income listed in the problem: Rental income from real estate, wages from employment, municipal bond interest income, and net investment income from stocks.

Identify the exception: Municipal bond interest income is generally exempt from federal income tax and is not subject to the Medicare contribution tax. This is because municipal bonds are issued by state and local governments, and their interest income is tax-advantaged.

Compare the other options: Rental income, wages, and net investment income are all subject to the Medicare contribution tax, as they fall under taxable categories defined by the IRS.

Conclude that municipal bond interest income is the correct answer because it is explicitly excluded from the Medicare contribution tax under federal tax regulations.