Question 1

A debit to the employees FIT payable account removes the liability for the amount of federal income taxes withheld from employees' wages.

Accepted Answer

Debiting the employees FIT payable account would decrease the liability for federal income taxes withheld from employees' wages, since it would mean that the taxes have been paid or applied to the employee's tax liability.

Question 2

Deductions from gross pay in the payroll register are reflected on the credit side of the journal entry to record the payroll.

Accepted Answer

Deductions from gross pay, such as taxes and benefits, are subtracted from gross pay to calculate net pay. This net pay is the amount that is credited to employees' accounts and reflected on the credit side of the journal entry to record the payroll.

Question 3

Once the journal entry for the payroll is complete, the information is posted to the appropriate general ledger accounts.

Accepted Answer

Once a journal entry for payroll is complete, the information is then posted to the appropriate general ledger accounts. This allows for accurate record keeping and tracking of expenses related to payroll.

Question 4

An employee's marital status and number of withholding allowances never appear on the payroll register.

Accepted Answer

An employee's marital status and number of withholding allowances often appear on the payroll register as they are relevant for determining the amount of federal income tax to withhold from the employee's paycheck.

Question 5

If wages are paid weekly, postings to the employee's earnings record would be done once a month.

Accepted Answer

If wages are paid weekly, postings to the employee's earnings record should be done weekly to ensure accuracy and timely updates to the employee's earnings record.

Question 6

Tips received by employees are not included as disposable earnings subject to garnishment.

Accepted Answer

This is true, as tips are not considered as regular wages and therefore do not fall under the definition of disposable earnings subject to garnishment.

Question 7

The total of the net amount paid to employees each payday is credited to either the cash account or the salaries payable account.

Accepted Answer

The total net amount paid to employees is either paid out from the cash account or held as a liability in the salaries payable account until it is paid out in the future. Therefore, the total net amount paid to employees is credited to either the cash account or the salaries payable account.

Question 8

Amounts withheld from employees' wages for health insurance are credited to a liability account.

Accepted Answer

This is true because the withheld amounts are owed to the insurance company and represent a liability for the employer until they are remitted to the insurance company on behalf of the employee.

Question 9

Companies usually provide a separate column in the payroll register to record the employer's payroll taxes.

Accepted Answer

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Question 10

Under the Consumer Credit Protection Act, disposable earnings are the earnings remaining after any deductions for health insurance.

Accepted Answer

Disposable earnings are the earnings remaining after deductions required by law, such as taxes and Social Security, not just health insurance.

Question 11

Tax withholdings from employees' pays reduce the amount of the debit to Salary Expense in the payroll entry.

Accepted Answer

Tax withholdings from employees' pays do not reduce the amount of the debit to Salary Expense; instead, they create a liability for the amount withheld, which the employer must remit to the appropriate tax authority. The total gross salary is debited to Salary Expense.

Question 12

Each payday, the total of net pays that the employer incurs is the wage expense that must be debited.

Accepted Answer

The total of net pays is not the wage expense debited by the employer; rather, the gross wages (total earnings before any deductions) represent the wage expense that is debited. Net pay is the amount after deductions like taxes and benefits, which is paid to employees.

Question 13

An employer will use the payroll register to keep track of an employee's accumulated wages.

Accepted Answer

The answer of An employer will use the payroll register...

Question 14

Service charges that are passed on to the employee by the employer are not part of the disposable earnings subject to garnishment.

Accepted Answer

Service charges passed on to the employee by the employer are considered part of the employee's earnings and thus are included in the calculation of disposable earnings subject to garnishment. Disposable earnings are the employee's earnings after legally required deductions, and since service charges passed on to employees increase their earnings, they are factored into garnishment calculations.

Question 15

FIT Payable is a liability account used to record employees' withheld federal income tax and also the employer's match of that tax.

Accepted Answer

FIT Payable is a liability account used to record employees' withheld federal income tax, but it does not include the employer's match of that tax. The employer's match is related to Social Security and Medicare taxes, not federal income tax.

Question 16

In order to prepare Forms W-2, an employer would utilize the employee's earnings record.

Accepted Answer

An employer would use the employee's earnings record to prepare Forms W-2.

Question 17

When withheld union dues are turned over to the union by the employer, a journal entry is made debiting the liability account and crediting the cash account.

Accepted Answer

This is correct accounting treatment for the transfer of withheld union dues to the union. The liability account represents the amount owed to the union for the dues collected on behalf of its members, and the cash account reflects the actual cash transferred to the union.

Question 18

Under the provisions of the Consumer Credit Protection Act, an employer can discharge an employee simply because the employee's wage is subject to garnishment for a single indebtedness.

Accepted Answer

The Consumer Credit Protection Act prohibits employers from firing employees solely because their wages are being garnished for a single debt. Employers who violate this provision can face penalties and fines.

Question 19

The wage and salaries expense account is an operating expense account debited for total net pay each payroll period.

Accepted Answer

The wage and salaries expense account is debited for the gross pay (total earnings before any deductions) each payroll period, not the net pay. Net pay is the amount employees receive after deductions.

Question 20

Every state allows employers to make e-payment options as a condition of employment.

Accepted Answer

While many states allow employers to offer e-payment options, not all of them allow it to be a condition of employment. Some states require that employees have the option to choose between electronic and traditional paper methods of payment.

Quiz 6: Analyzing and Journalizing Payroll