Klimit, the Company Profiled in the Opening Feature for Chapter

question 5

Multiple Choice

Klimit, the company profiled in the opening feature for Chapter 1, plans to make money on the ski jackets and other apparel products that will use its proprietary technology by:

• A) manufacturing the products and selling them via catalogues and the Internet
• B) manufacturing the products and selling through large retailers like Gap and Old Navy
• C) franchising
• D) manufacturing the products and selling them through ski shops and other specialty stores
• E) licensing its technology to outdoor gear and apparel companies

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Definitions:

Social Security Portion

The part of income that goes towards Social Security contributions, typically seen on payroll statements.

Annual Wage Base

The maximum amount of earnings on which employees must pay Social Security taxes in a given year.

FUTA Tax

Federal Unemployment Tax Act tax, an employer-paid tax used to fund state workforce agencies.

Maximum Credit

Refers to the highest amount of credit a taxpayer can claim on their tax return, which directly reduces their tax liability.