When calculating the employer's payroll tax expense, the clerk forgot about the wage base limits. This will cause:
A) the expenses to be overstated.
B) the assets to be overstated.
C) the liabilities to be overstated.
D) Both A and C are correct.

Question

Quizplus · Accepted Answer

Forgetting about the wage base limits when calculating the employer's payroll tax expense would lead to an overestimation of the amount owed for taxes such as Social Security. This overestimation would result in both the expenses (payroll tax expense) and the liabilities (taxes payable) being overstated.

When Calculating the Employer's Payroll Tax Expense, the Clerk Forgot