A Company Is a Legal Entity and as Such Has

question 15

Multiple Choice

A company is a legal entity and as such has an additional expense for ________________ in its income statement that sole traders and partnerships do not have.

• A) legal entity expenses
• B) cost of sales
• C) income tax
• D) depreciation

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Definitions:

Federal Income Taxes

Taxes levied by the federal government on the annual earnings of individuals, corporations, trusts, and other legal entities.

Payroll Tax Expense

Taxes imposed on employers and employees, calculated as a percentage of the salaries that employers pay their staff.

FICA Tax

A United States federal payroll tax imposed on both employees and employers to fund Social Security and Medicare.

Federal Government

The national government of a federated state, which holds the authority to govern the entire country.