The employer records the amount of federal income tax withheld as:
A) an asset.
B) a payroll tax expense.
C) a liability.
D) an expense.

Question

Quizplus · Accepted Answer

The amount of federal income tax withheld from an employee's paycheck is a liability because the employer is required to hold onto those funds and eventually pay them to the government on behalf of the employee. It is not an asset because it does not represent something of value that the employer owns, and it is not an expense because it is not a direct cost of running the business. It is considered a payroll tax expense in the sense that the employer is responsible for calculating and remitting the proper amount of taxes, but specifically, the amount of federal income tax withheld is a liability.

The Employer Records the Amount of Federal Income Tax Withheld