A. Katie is preparing 1099 tax forms.
Which QuickBooks function would be most useful?
Employees
Company
Vendors
Tax
B. An example of a production overhead would be:
Supervisory costs
Royaties
Direct material
Direct labour
The Correct Answer and Explanation is :
A. Which QuickBooks function would be most useful for preparing 1099 tax forms?
The most useful QuickBooks function for preparing 1099 tax forms is Vendors.
Explanation:
The 1099 tax form is used to report payments made to independent contractors or vendors who are not employees. In QuickBooks, the “Vendors” section allows you to manage information related to contractors, suppliers, and service providers. These are the individuals or businesses to whom you may issue a 1099 form for tax reporting purposes.
To prepare 1099 forms in QuickBooks, you must first ensure that vendor records are complete with the necessary information, such as their taxpayer identification number (TIN) and business address. QuickBooks can automatically track payments made to these vendors and identify those who qualify for 1099 reporting based on specific criteria (e.g., the amount paid in a year). The “Vendors” function allows you to set up vendor profiles, track payments, and run reports for generating 1099 forms at the end of the year.
QuickBooks also offers a streamlined 1099 reporting tool under the “Vendors” menu, helping to ensure that businesses comply with IRS requirements by accurately generating and filing the 1099 forms.
B. An example of a production overhead would be:
The correct answer is Supervisory costs.
Explanation:
Production overhead refers to the indirect costs associated with manufacturing products that are not directly tied to any specific unit of production but are necessary for the manufacturing process. These costs are essential to the overall production but cannot be directly traced to specific goods produced.
In this context, supervisory costs fall under production overhead. Supervisors, while not directly involved in producing goods (like workers on the production line), manage and oversee the production process. Their salaries and related expenses are considered part of production overhead because they support the production function but are not directly tied to any individual unit of output.
Other examples of production overhead include utilities, factory maintenance, depreciation of machinery, and insurance. These are all necessary costs for keeping the production process running, but they are not directly attributable to a specific product.
On the other hand:
- Royalties are payments for the use of intellectual property and are not part of production overhead.
- Direct material refers to raw materials directly used in the production of goods and is not considered overhead.
- Direct labor refers to the wages of workers who are directly involved in producing products, not overhead.
In summary, production overhead is made up of costs like supervisory wages, maintenance, and utilities, which support production but cannot be attributed directly to specific products.