Which of the Following Statements Is True Regarding Independent Contractors

question 42

Multiple Choice

Which of the following statements is true regarding independent contractors?

• A) An independent contractor is a legal employee of the company which hired him/her.
• B) Using an independent contractor increases the employer's exposure to laws and regulations governing the employment relationship.
• C) Using an independent contractor frees an employer from the tax withholding and tax payment obligations it has for its employees.
• D) Using an independent contractor substantially increases the right of the employer to control the contractor.

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Definitions:

Full Disclosure Principle

The accounting principle that requires companies to fully disclose on their financial reports changes in accounting procedures and methods along with effects of the change as well as justification for change.

Inventory Valuation Method

The approach used to assess and report the value of a company's inventory, including methods such as FIFO (First In, First Out), LIFO (Last In, First Out), and average cost.

Financial Reports

Documents that provide an overview of a business's financial condition, including balance sheets, income statements, and cash flow statements.

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made periodically, often at the end of an accounting period, rather than continuously.