, MHIC EXAM 2022 QUESTIONS AND
ANSWERS 100% CORRECT!
Business Types not Required to have EIN # - ANSWER -sole proprietorships with no
employees
-LLCs with single owner
S corporation - ANSWER a business entity that meets certain requirements to be able
to inherit the protective benefits of being a corporation, but be taxed as a partnership.
- must be domestically incorporated
- must have only a single type of stock and less than 100 shareholders.
- shareholder distributions are taxed on the individual shareholder tax returns
- it can pass these incomes to shareholder without having to pay any fed corporate tax,
deemed a "pass through." Owner pays taxes at their respective tax rate and not the
corporate tax rate
Self Employment Tax - ANSWER Tax for individuals that work for themselves to pay
their portion of Social Security and Medicare benefits.
Requirements to be Classified as IRS Deductible Expense - ANSWER to be deductible,
it must be an "ordinary" and "necessary" expense. Thus it is an expense that is common
in your industry, but is also helpful/appropriate for your trade or business.
Employment Taxes that are not Withheld from Paychecks - ANSWER -FUTA
-State Unemployment tax
FICA - ANSWER - Stands for Federal Insurance Contributions Act
- Employers withhold FICA (social security and Medicare) from employee paychecks
and also pay a matching employer portion.
-Form 941 reconciles this
Franchise tax - ANSWER A tax levied on the right to do business in a state as a
corporation. Although income considerations may come into play, the tax usually is
based on the capitalization of the corporation.
The Basic Accounting Cycle - ANSWER 1. Classifying and recording transactions
ANSWERS 100% CORRECT!
Business Types not Required to have EIN # - ANSWER -sole proprietorships with no
employees
-LLCs with single owner
S corporation - ANSWER a business entity that meets certain requirements to be able
to inherit the protective benefits of being a corporation, but be taxed as a partnership.
- must be domestically incorporated
- must have only a single type of stock and less than 100 shareholders.
- shareholder distributions are taxed on the individual shareholder tax returns
- it can pass these incomes to shareholder without having to pay any fed corporate tax,
deemed a "pass through." Owner pays taxes at their respective tax rate and not the
corporate tax rate
Self Employment Tax - ANSWER Tax for individuals that work for themselves to pay
their portion of Social Security and Medicare benefits.
Requirements to be Classified as IRS Deductible Expense - ANSWER to be deductible,
it must be an "ordinary" and "necessary" expense. Thus it is an expense that is common
in your industry, but is also helpful/appropriate for your trade or business.
Employment Taxes that are not Withheld from Paychecks - ANSWER -FUTA
-State Unemployment tax
FICA - ANSWER - Stands for Federal Insurance Contributions Act
- Employers withhold FICA (social security and Medicare) from employee paychecks
and also pay a matching employer portion.
-Form 941 reconciles this
Franchise tax - ANSWER A tax levied on the right to do business in a state as a
corporation. Although income considerations may come into play, the tax usually is
based on the capitalization of the corporation.
The Basic Accounting Cycle - ANSWER 1. Classifying and recording transactions
