Which of the Following Is Subject to Federal Income Tax

question 56

Multiple Choice

Which of the following is subject to federal income tax?

• A) The tax credit earnings on a Roth individual retirement account (IRA)
• B) Municipal bond interest
• C) Child-support payments
• D) Tips received
• E) Personal exemptions

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Definitions:

Posting Reference Notation

A symbol, number, or letter added to ledger entries to identify the source document or journal where the transaction was first recorded.

Ledger

A comprehensive collection of accounts that records all financial transactions of a business, organized to show the financial status and activities.

Account Number

An account number is a unique identifier assigned to an account held by a bank, financial institution, or service provider to differentiate it from other accounts.

Assets

Assets are resources owned or controlled by a business, expected to produce economic value or future benefits.