Question 1

FUTA Taxes Payable is an expense account in which are recorded the employer's federal unemployment taxes.

Accepted Answer

FUTA Taxes Payable is a liability account, not an expense account, where the employer's federal unemployment taxes are recorded until they are paid to the government.

Question 2

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

Accepted Answer

An employer would utilize the employee's earnings record to prepare Forms W-2, which reports the employee's annual earnings and tax withholdings.

Question 3

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 4

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 are considered as credits because they reduce the amount of net pay. Therefore, they are reflected on the credit side of the journal entry to record the payroll.

Question 5

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

Accepted Answer

The answer of Companies usually provide a separate column in...

Question 6

When recording FICA taxes, different liability accounts should be set up for the employees' and employer's portions of the tax.

Accepted Answer

The answer of When recording FICA taxes, different liability accounts...

Question 7

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 8

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 9

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 10

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

Accepted Answer

A debit entry reduces the balance of a liability account, meaning the amount of federal income taxes withheld is no longer owed to the employees and is removed from the FIT payable account.

Question 11

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 12

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

Accepted Answer

Amounts withheld from employees' wages for health insurance are a liability that the employer owes to the insurance provider. Therefore, they are credited to a liability account.

Question 13

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 an employer from discharging an employee simply because their wages are subject to garnishment for a single indebtedness. It provides some protections for employees' wages that are subject to garnishment.

Question 14

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. Withheld union dues are a liability until they are turned over to the union, at which point they are recorded as a credit to the union dues payable liability account and a debit to the cash account in the company's general ledger.

Question 15

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

This statement is true. The net amount paid to employees each payday is either paid out in cash or recorded as a liability in the salaries payable account until it is paid out in the future.

Question 16

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

Accepted Answer

Once the payroll journal entry is complete, the information is posted to the appropriate general ledger accounts to ensure that all the debits and credits are recorded properly.

Question 17

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 would be done every week.

Question 18

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 19

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 20

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

Accepted Answer

While some states may allow employers to offer e-payment as an option, no state allows it to be made a condition of employment. Employees must be given the option to receive payment in the form of a physical check if they so choose.

Quiz 6: Analyzing and Journalizing Payroll Transactions