Multiple Choice
Which of the following best describes irregular receivables, and which is an example?
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7. Receivables and Investments
Types of Receivables
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All of the following individuals should receive a W-2 form except:
A
A part-time worker on the company payroll
B
A salaried manager
C
A contractor paid for freelance services
D
An employee who earned wages during the year
Verified step by step guidance1
Understand the purpose of a W-2 form: A W-2 form is used to report wages paid to employees and the taxes withheld from their paychecks. It is issued by employers to employees who are on the payroll.
Identify the key distinction between employees and contractors: Employees are individuals who work under the control and direction of an employer, while contractors are independent workers who provide services but are not considered employees.
Review the options provided: A part-time worker on the company payroll, a salaried manager, and an employee who earned wages during the year are all considered employees and should receive a W-2 form.
Analyze the exception: A contractor paid for freelance services is not an employee but an independent worker. Contractors typically receive a 1099 form instead of a W-2 form to report their income.
Conclude that the correct answer is the contractor, as they are not classified as an employee and therefore do not receive a W-2 form.
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