Deck 9: Payroll Accounting: Employer Taxes and Reports

Question 1

The date by which federal income tax withholding, Social Security, and Medicare taxes must be paid depends on the amount of these taxes.

Answer 1

True

Question 2

The cost of workers' compensation insurance to a construction company with 15 employees would likely be higher than the cost of insurance to a small candy company with 15 employees.

Answer 2

True

Question 3

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
Most employers have to pay FICA and FUTA taxes.

Answer 3

True

Question 4

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
Self-employed individuals can be viewed as both employer and employee.

Question 5

In general, the larger the amount of Social Security and Medicare taxes due from an employer, the more frequently payments must be made.

Question 6

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
The employer FICA tax is levied on employers at the same rate and on the same earnings bases as the employee FICA tax.

Question 7

Employers are allowed a credit against the FUTA tax for participation in state unemployment programs.

Question 8

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
The FUTA tax applies to all employee earnings throughout the year.

Question 9

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
Persons earning self-employment income of $400 or more must pay a self-employment tax.

Question 10

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
Self-employment income is the gross income of a trade or business run by an individual.

Question 11

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
Employers' payroll taxes include FICA, FUTA, and SUTA taxes.

Question 12

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
The employer must pay the amount owed for Social Security and Medicare by the business to the IRS; however, the employees pay for Social Security and Medicare directly to the IRS.

Question 13

The due date for payroll taxes is the last day of each fiscal quarter: March 31, June 30, September 30, and December 31.

Question 14

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
Self-employment tax is double the Social Security and Medicare rates.

Question 15

Form 940 is called the Employer's Quarterly Federal Tax Return.

Question 16

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
The amount of employers' Medicare taxes is computed by multiplying total earnings by 1.45%.

Question 17

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
One-half of the self-employment tax is really a personal expense to the owner of the business.

Question 18

If an employer wishes, the FUTA tax may be deducted from employees' earnings.

Question 19

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
The payroll register is a key source of information for computing employer payroll taxes.

Question 20

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
Self-employment tax is a contribution to the unemployment compensation program.

Question 21

Since there is no maximum earnings on the Medicare component of the Social Security tax, the Medicare tax rate of 1.45% is applied to total earnings.

Question 22

In most states, if an employer has very few former employees who collect unemployment compensation, the employer qualifies for a lower state unemployment tax rate.

Question 23

By January 31 each year, employers must furnish each employee with a Wage and Tax Statement.

Question 24

The EFTPS is an electronic funds transfer system for making federal tax deposits.

Question 25

Employees usually pay the entire cost of workers' compensation insurance.

Question 26

Each employer must have an Employer Identification Number (EIN) to show on all tax reports.

Question 27

Workers' compensation provides insurance for employees who suffer a job-related illness or injury.

Question 28

The Social Security, Medicare, FUTA, and SUTA tax accounts normally have credit balances.

Question 29

Employer payroll taxes clearly are an insignificant cost of doing business.

Question 30

In most states, the state unemployment tax is levied only on employers.

Question 31

Social Security, Medicare, FUTA, and SUTA taxes have separate liability accounts.

Question 32

The due date for payroll taxes is not the same date for all employers.

Question 33

If an employer qualifies for a lower state unemployment tax rate, this lowers the credit allowed in computing the federal unemployment tax due.

Question 34

FUTA taxes are deposited and an annual report of federal unemployment tax is filed using Form 8109.

Question 35

Form 941, Employer's Quarterly Federal Tax Return, must be filed with the IRS at the end of the month following each calendar quarter.

Question 36

Which of the following is a payroll tax normally paid by both the employee and the employer?

A) Medicare tax
B) FUTA tax
C) property tax
D) SUTA tax

Question 37

SUTA tax payments vary among states but are usually required on a quarterly basis.

Question 38

Journalizing payroll taxes for the employer will require several debit entries but only one credit entry.

Question 39

The Social Security, Medicare, and FUTA tax accounts are debited when the taxes are actually paid to the IRS.

Question 40

Any Federal Reserve Bank or other authorized commercial bank may issue an Employer Identification Number (EIN).

Question 41

The total payroll cost to an employer of an employee who has gross earnings of $78,000 is

A) $78,000 plus 30 percent.
B) less than $78,000.
C) exactly $78,000.
D) more than $78,000.

Question 42

The federal unemployment tax is levied on

A) employers and is not deducted from employees' earnings.
B) employees and is deducted from customer payments.
C) employers and is deducted from employees' earnings.
D) employees and employers.

Question 43

The date on which an employer must pay Social Security and Medicare taxes is

A) January 1 of each year.
B) December 31 of each year.
C) June 30 of each year.
D) dependent on the amount of the taxes.

Question 44

Form 941 is a(n)

A) Employee Withholding Allowance Certificate.
B) Employer's Quarterly Federal Tax Return.
C) Wage and Tax Statement.
D) Employer's Annual Federal Unemployment Tax Return.

Question 45

To journalize the payment of Medicare taxes to the IRS, the correct entry would be

A) debit Medicare Tax Payable and credit IRS.
B) debit Medicare Tax Payable and credit Social Security Payable.
C) debit Medicare Tax Payable and credit Cash.
D) debit Medicare Tax Payable and credit Payroll Taxes Expense.

Question 46

The employer pays which of the following to the Internal Revenue Service?

A) the employer's Social Security and Medicare taxes
B) sales taxes
C) property taxes
D) no taxes

Question 47

Employers who have less than $2,500 due in federal income tax withholding and Social Security and Medicare taxes at the end of the quarter should journalize the debt and pay at the end of the

A) year.
B) quarter.
C) month following the end of the quarter.
D) next banking day.

Question 48

Employers who have $100,000 or more due in federal income tax withholding and Social Security and Medicare taxes on any day during the current quarter should journalize the debt and pay at the end of the

A) year.
B) quarter.
C) month following the end of the quarter.
D) next banking day.

Question 49

A key source of information for computing employer payroll taxes is the

A) statement of owner's equity.
B) end-of-period balance sheet.
C) payroll register.
D) employees' check stubs.

Question 50

A self-employment tax is required of an individual who owns his or her own business and makes

A) $1 or more.
B) $200 or more.
C) $400 or more.
D) $1,000 or more.

Question 51

To journalize the employer's payroll taxes, we need to credit all of the following accounts EXCEPT

A) Payroll Taxes Expense.
B) Social Security Tax Payable.
C) Medicare Tax Payable.
D) FUTA Tax Payable.

Question 52

An Employer Identification Number (EIN) is obtained by the employer from the

A) nearest Federal Reserve Bank.
B) CIA.
C) Internal Revenue Service.
D) nearest local federally insured bank.

Question 53

The rules by which employers must deposit Social Security and Medicare taxes can be found in the

A) Circular E--Employer's Tax Guide.
B) Circle K Tax Guide.
C) Federal Reserve Bank Tax Guide.
D) state tax guide.

Question 54

The employer usually pays the entire cost of

A) FICA.
B) Workers' Compensation Insurance.
C) Medical Insurance.
D) Disability Insurance.

Question 55

A self-employment tax is a contribution to the

A) charities of the individual owner's choice.
B) SUTA programs.
C) FUTA programs.
D) Social Security and Medicare programs.

Question 56

Melissa Taylor has gross earnings of $425 and withholdings of $26.35 for Social Security tax, $6.16 for Medicare tax, and $35 for federal income tax. Her employer pays $26.35 for Social Security tax, $6.16 for Medicare tax, $3 for FUTA tax, and $9 for SUTA tax. The total cost of Melissa to her employer is

A) $32.51.
B) $425.00.
C) $469.51.
D) $437.00.

Question 57

When all taxes have been paid, the Social Security Tax Payable account will have

A) a debit balance.
B) a credit balance.
C) a zero balance.
D) equal debit and credit balances.

Question 58

After estimating its payroll for the year, an employer usually pays workers' compensation insurance

A) at the beginning of the year.
B) monthly.
C) quarterly.
D) at the end of the year.

Question 59

Which of the following tax programs often has a merit-rating system to encourage employers to provide regular employment for workers?

A) FICA
B) FUTA
C) SUTA
D) workers' compensation insurance

Question 60

The self-employment tax rate is double the rate of

A) Social Security and Medicare taxes.
B) FUTA taxes.
C) SUTA taxes.
D) property taxes.

Question 61

Anthony Pescador owns Sundance Florist. He does his banking at United Credit Union (UCU) in Myrtle Beach, South Carolina. The amounts in his general ledger for payroll taxes and the employee's withholding of Social Security, Medicare, and federal income tax as of April 15 of the current year show the following: Social Security tax payable (employer and employee), $3,412; Medicare tax payable (employer and employee), $816; FUTA tax payable, $180; SUTA tax payable, $1,256; and Employee income tax payable, $9,828. Journalize the payment of the Form 941 deposit to UCU and the payment of the SUTA tax to the State of South Carolina as of April 15, 20--.

Question 62

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
Transmittal of Wage and Tax Statements

Question 63

Mark Turney owns Creative Corners. He does his banking at United Federal Bank (UFB) in Tucson, Arizona. The amounts in his general ledger for payroll taxes and the employee's withholding of Social Security, Medicare, and federal income tax as of April 15 of the current year show the following: Social Security tax payable (employer and employee), $3,020; Medicare tax payable (employer and employee), $734; FUTA tax payable, $84; SUTA tax payable, $414; and Employees income tax payable, $4,622. Journalize the payment of the Form 941 deposit to UFB and the payment of the SUTA tax to the State of Arizona as of April 15, 20--.

Question 64

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
Taxes levied on employers at the same rates and on the same earnings bases as the employee FICA taxes.

Question 65

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
An electronic funds transfer system for making federal tax deposits.

Question 66

From the following information from the payroll register of Veronica's Auto Supply Store, calculate the amount of taxable earnings for unemployment and FICA tax, and prepare the journal entry to record the employer's payroll taxes as of April 30, 20--. Social Security tax is 6.2% on the first $94,200 of earnings for each employee. Medicare tax is 1.45% of gross earnings. FUTA tax is 0.8%, and SUTA tax is 5.4% each on the first $7,000 of earnings.

Question 67

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
A tax levied on employers to raise funds to pay unemployment benefits.

Question 68

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
A contribution to the FICA program.

Question 69

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
Employer's Quarterly Federal Tax Return

Question 70

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
Employer's Annual Federal Unemployment Tax Return

Question 71

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
Provides insurance for employees who suffer a job-related illness or injury.

Question 72

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
A tax levied on employers to raise funds to administer the federal/state unemployment compensation program.

Question 73

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
Employee's Wage and Tax Statement

Question 74

Selected information from the payroll register of Barbara's Stables for the week ended September 28, 20--, is as follows: Social Security tax is 6.2% on the first $110,100 of earnings for each employee. Medicare tax is 1.45% of gross earnings, FUTA tax is 0.8%, and SUTA tax is 5.4% each on the first $7,000 of earnings. ​
Calculate the amount of taxable earnings for unemployment and Social Security taxes, and prepare the journal entry to record the employer's payroll taxes as of September 28, 20--.

Question 75

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
A system to encourage employers to provide regular employment to workers.

Question 76

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
A number that identifies the employer on all payroll forms and reports filed with the IRS.

Question 77

Match the terms with the definitions.a.Electronic Federal Tax Payment System (EFTPS)
b.employer FICA taxes
c.Employer Identification Number (EIN)
d.Form W-2
e.Form W-3
f.Form 940
g.Form 941
h.FUTA (Federal Unemployment Tax Act) tax
i.merit-rating system
j.self-employment income
k.self-employment tax
l.SUTA (state unemployment tax) tax
m.workers' compensation insurance
The net income of a trade or business run by an individual.

Question 78

The cost of workers' compensation insurance for the employer depends on all of the following EXCEPT

A) the number of employees.
B) the riskiness of the jobs the employees perform.
C) the company's accident history.
D) the amount of FICA, FUTA, and SUTA taxes due.

Question 79

The adjustment to journalize an additional premium due at the end of the year for workers' compensation insurance (WCI) is

A) debit WCI Expense and credit Cash.
B) debit WCI Expense and credit Insurance Refund.
C) debit WCI Expense and credit WCI Payable.
D) debit Insurance Payable and credit WCI Payable.