Question

Which of the following items must be reported as employee income?

Select one:
a. money paid to vendors for products
b. tips received by an employee
c. operating expenses paid by the salon
d. change given to a client following payment

Answer 1

Tips received by an employee must be reported as employee income, along with wages, salaries, commissions, and other forms of labor income. Items such as money paid to vendors, operating expenses, and change given to clients are not considered employee income.

Step-by-step explanation:

In a business setting, there are certain items that must be reported as employee income. One of these items is tips received by an employee. When an employee receives tips from customers, it is considered part of their income and must be reported for tax purposes.

Other items that must be reported as employee income include wages, salaries, commissions, and any other forms of labor income. These are the payments that employees receive in exchange for their work.

Items such as money paid to vendors for products, operating expenses paid by the salon, and change given to a client following payment are not considered employee income and do not need to be reported as such.