Deck 11: Payroll

Question 1

FICA taxes and federal income taxes are levied on employees' earnings without limit.

Answer 1

False

Question 2

An employee's time card is used to record the number of exemptions claimed by the employee for income tax withholding purposes.

Answer 2

True

Question 3

Changes in pay rates during employment should be authorized by the

A)personnel department.
B)payroll department.
C)treasurer's department.
D)timekeeping department.

Answer 3

A

Question 4

The Fair Labor Standards Act does not

A)offer minimum standards for wages and overtime entitlement.
B)provide administrative procedures by which covered work time must be compensated.
C)require extra pay for Saturday and Sundays.
D)include provisions for child labor.

Question 5

A good internal control feature is to have a written hiring authorization form completed before a new employee is added to the payroll.

Question 6

Identify the equation for net pay.

A)gross earnings - taxes
B)payroll deductions - gross earnings
C)gross earnings - payroll deductions
D)gross earnings - overtime pay

Question 7

The computation of payroll involves

A)gross earnings, payroll deductions, and net pay.
B)benefits, gross earnings, and payroll deductions.
C)payroll deductions, net pay, and benefits.
D)bonuses, gross earnings, and health care.

Question 8

An employee earnings record is a cumulative record of each employee's gross earnings, deductions, and net pay during the year.

Question 9

The payroll is paid by the

A)personnel department.
B)payroll department.
C)cashier.
D)treasurer's department.

Question 10

Payroll is prepared in the payroll department on the basis of:

A)human resources department authorizations and approved time cards.
B)approved time cards only.
C)an hour and wage chart.
D)managerial paperwork.

Question 11

Which of the following is not performed by the payroll department?

A)Preparation of payroll checks
B)Maintaining payroll records
C)Signing of payroll checks
D)Preparation of payroll tax returns

Question 12

Control over timekeeping does not include

A)having one employee punch the time cards for several employees in the same work area.
B)time clock procedure monitoring by a supervisor.
C)pay period time reports kept by a supervisor for salaried personnel.
D)overtime approval by a supervisor.

Question 13

Internal control over payroll is not necessary because employees will complain if they do not receive the correct amount on their payroll checks.

Question 14

The objective of internal control for payroll is

A)to safeguard company assets against unauthorized payments of payrolls.
B)to make sure the checks are written correctly.
C)
C)to ensure the accuracy and reliability of the accounting records pertaining to payrolls.
D)both a and

Question 15

The 1982 Tax Equity and Fiscal Responsibility Act established the 8% rule for food and beverage operations.

Question 16

FICA taxes withheld and federal income taxes withheld are mandatory payroll deductions.

Question 17

Which of the following employees would likely receive a salary instead of wages?

A)Store clerk
B)Factory employee
C)Sales manager
D)Manual laborer

Question 18

Which one of the following is a payroll function?

A)hiring employees.
B)timekeeping.
C)preparing and paying the payroll.
D)all of the above.

Question 19

The Fair Labor Standards Act provides maximum standards for both wages and overtime entitlement.

Question 20

The state unemployment tax rate is usually 5.4% on the first $7,000 of wages paid to an employee during the year.

Question 21

Which one of the following payroll taxes is not withheld from the employee's wages because it is not levied on the employee?

A)Federal income tax
B)Federal unemployment tax
C)State income tax
D)FICA tax

Question 22

According to the 1982 Tax Equity and Fiscal Responsibility Act what percentage of gross sales should be reported as tipped income?

A)9%
B)6%
C)8%
D)18%

Question 23

Employees claim allowances for income tax withholding on

A)Form W-4.
B)Form W-2.
C)Form 1040.
D)Schedule A.

Question 24

The effective federal unemployment tax rate is usually

A)6.2%.
B)0.8%.
C)5.4%.
D)8.0%.

Question 25

All income earned by an employee, be it wage from their employer or tips from guests, is _______________.

Question 26

Which type of establishment is not included in the 1982 Tax Equity and Fiscal Responsibility Act?

A)fine dining restaurants
B)cafeterias
C)casual dining restaurants
D)casinos

Question 27

Which method is acceptable when determining shortfall allocation based on the number of hours worked?

A)hours calculated method
B)hours worked method
C)gross receipts method
D)hours recorded method

Question 28

Most companies involved in interstate commerce are required to compute overtime at

A)the worker's regular hourly wage.
B)1.25 times the worker's regular hourly wage.
C)1.5 times the worker's regular hourly wage.
D)2.5 times the worker's regular hourly wage.

Question 29

Linda Smith's regular rate of pay is $12 per hour with one and one-half times her regular rate for any hours which exceed 40 hours per week.She worked 48 hours last week.Therefore, her gross wages were

A)$576.
B)$480.
C)$624.
D)$864.

Question 30

The federal unemployment tax provides

A)benefits to children whenever their parents are unemployed.
B)benefits for a limited period of time to employees who are fired.
C)benefits for a limited period of time to employees who lose their jobs through no fault of their own.
D)benefits to employees as long as they are without a job.

Question 31

The tax that is paid equally by the employer and employee is the

A)federal income tax.
B)federal unemployment tax.
C)state unemployment tax.
D)FICA tax.

Question 32

Two federal taxes which are levied against employees' wages that must be deducted in arriving at net pay are (1) ________________ taxes and (2) _______________ taxes.

Question 33

Susan Shilo has worked 44 hours this week at the Grand Hotel.She worked in excess of 8 hours each day.Her regular hourly wage is $15 per hour.What are Susan's gross wages for the week? (The company Susan works for is in compliance with the Fair Labor Standards Act.)

A)$660
B)$690
C)$990
D)$720

Question 34

The journal entry to record the payroll for a period will include a credit to Wages and Salaries Payable for the gross

A)amount less all payroll deductions.
B)amount of all paychecks issued.
C)pay less taxes payable.
D)pay less voluntary deductions.

Question 35

Assuming a FICA tax rate of 8% on the first $87,000 in wages, and a federal income tax rate of 20% on all wages, what would be an employee's net pay for the year if he earned $95,000?

A)$88,040
B)$68,400
C)$76,000
D)$69,040

Question 36

FICA taxes do not provide workers with

A)life insurance.
B)supplemental retirement.
C)employment disability.
D)medical benefits.

Question 37

Which one of the following payroll taxes does not result in a payroll tax expense for the employer?

A)FICA tax
B)Federal income tax
C)Federal unemployment tax
D)State unemployment tax

Question 38

A tip is defined as

A)any amount of money left by a guest for the waitstaff and any service charge on a bill distributed to the waitstaff.
B)any amount of money that the waitstaff earns.
C)any amount of money left by a guest for the waitstaff over a certain percentage of gross sales.
D)any amount of money waitstaff receives over minimum wage.

Question 39

By January 31 following the end of a calendar year, an employer is required to provide each employee with a(n)

A)state unemployment tax form.
B)federal unemployment tax form 940.
C)wage and tax statement form W-2.
D)employee's withholding allowance certificate form W-4.

Question 40

Tipped employees earn their wages by receiving

A)tips from guests.
B)
B)a specified rate from their employer.
C)wages from the federal government.
D)both a and

Question 41

The employer incurs a payroll tax expense equal to the amount contributed by each employee for ______________ taxes.

Question 42

A payroll tax expense which is borne entirely by the employer is the federal _______________ tax.

Question 43

Preparation of the payroll tax returns is the responsibility of the ________________ department; payment of the taxes is made by the ________________ department.