Hap Owns and Operates a Small Business with Only Four

question 335

Multiple Choice

Hap owns and operates a small business with only four full-time employees and less than $500,000 in annual sales.He currently uses a manual accounting system and relies on a part-time bookkeeper to keep his records in order.In evaluating the possible adoption of a computerized accounting system,Hap will probably discover that:

• A)The expense of setting up a computerized accounting system would not be affordable at this time.
• B)He would be better off hiring a full-time accountant.
• C)He could benefit from adopting such a system,but should also consult with an accountant for advice about what's best.
• D)A computerized system would be affordable,but that he would have little need for it unless his company became significantly larger.

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Definitions:

Payroll Records

Documentation related to employees’ salaries, wages, bonuses, net pay, and deductions, essential for financial and legal purposes.

FICA Taxes Payable

The portion of FICA taxes that an employer needs to remit to the government, representing withheld employee taxes and the employer's contributions.

Salaries Expense

The total amount paid to employees for services rendered during a specific period, often considered an operating expense.

Federal Income Taxes Payable

The amount of income tax a company or individual owes to the federal government, which is due within the tax filing period.