Barr Fails to Make a Timely Deposit of FICA Taxes

question 57

Multiple Choice

Barr fails to make a timely deposit of FICA taxes and withheld income taxes until five days after the due date. The penalty facing Barr is:

• A) 2% of the undeposited taxes.
• B) 5% of the undeposited taxes.
• C) 10% of the undeposited taxes.
• D) 25% of the undeposited taxes.
• E) none of the above.

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Definitions:

Interest Expense

Cost incurred by an entity for borrowed funds, which may include payments on loans, bonds, and lines of credit.

Tax Rate

The proportion of income that the government takes from a person or company as taxes.

Incremental Cash Flow

The additional cash flow generated by a company as a result of engaging in a specific project or activity.

Cannibalization

The loss of sales of an existing product due to the introduction of a new product by the same company.