Why Is It Important for an Employer to Classify a Worker

question 2

Multiple Choice

Why is it important for an employer to classify a worker as either an employee or an independent contractor?

• A)For tax reporting purposes
• B)For child support obligations purposes
• C)For government tracking purposes
• D)For reimbursement purposes

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Definitions:

Goodwill Impairment

A charge that occurs when the fair value of goodwill falls below its carrying value on the balance sheet, indicating that the asset is not generating the expected profits.

Condensed Income Statement

A simplified financial statement showing the gross revenue, expenses, and net income of a company, omitting detailed accounts.

Adjusting Entries

Journal entries made at the end of an accounting period to allocate revenue and expenses to the period in which they actually occurred.

Supplies Expense

The cost recognized in the accounting period for supplies used, regardless of when the supplies were purchased.