Question 1

A ﬁrm has headquarters in Indiana but has oﬃces in California and Utah. For employee taxation purposes, it may choose which of those three states income
tax laws it wishes to use.

Accepted Answer

The statement is false. The firm cannot choose which state's income tax laws to use for employee taxation purposes. The state in which the employee works determines their income tax obligations.

Question 2

The use of paycards as a means of transmitting employee pay began in the 1990s with over-the-road drivers out of a need to transmit funds reliably on payday.

Accepted Answer

The statement is true. The usage of paycards started in the 1990s with the purpose of transmitting employee pay reliably on payday, mainly for over-the-road drivers.

Question 3

The regular Medicare tax deduction is 1.45% for employee and employer and must be paid by all employees.

Accepted Answer

The regular Medicare tax deduction is indeed 1.45% for both the employee and employer, and it is mandatory to be paid by all employees.

Question 4

Which are steps in the net pay computation process? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a
Question mark will be automatically graded as incorrect.)
A) Compute taxes to be withheld.
B) Report fringe benefit balances.
C) Compute gross pay.
D) Update employee records.

Accepted Answer

The answer of Which are steps in the net pay...

Question 5

The wage-bracket of determining federal tax withholding yields more accurate amounts than the percentage method.

Accepted Answer

The percentage method is generally more precise because it calculates withholding based on exact percentages of an employee's income, allowing for more accurate adjustments for different income levels and filing statuses. The wage-bracket method, while simpler, uses predefined income ranges and can be less precise for individual circumstances.

Question 6

What role does the employer play regarding an employee's federal withholding tax?
A) Collector and veriﬁer
B) Veriﬁer and reporter
C) Collector and depositor
D) Reporter and depositor

Accepted Answer

The employer serves as a collector and depositor of an employee's federal withholding tax. The employer withholds the necessary tax amount from the employee's paycheck and then deposits it with the government on behalf of the employee.

Question 7

Which of the following statements is/are true about Social Security tax deductions from gross pay? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box
For a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)
A) The wage base is $132,900.
B) The tax is computed on all earnings.
C) The tax rate is 6.0%.
D) Section 125 deductions are not subject to Social Security tax.

Accepted Answer

The answer of Which of the following statements is/are true...

Question 8

Which of the following is used in the determination of the amount of federal income tax to be withheld from an employee per pay period? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with
The question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)
A) Date of birth
B) Period salary
C) Marital status
D) Prior year's tax return

Accepted Answer

The answer of Which of the following is used in...

Question 9

Federal income tax, Medicare tax, and Social Security tax amounts withheld from employee pay are computed based on gross pay, less pre-tax deductions,
and deducted to arrive at net pay.

Accepted Answer

This statement is correct. Various taxes, including federal income tax, Medicare tax, and Social Security tax, are deducted from the gross pay after subtracting pre-tax deductions to calculate an employee's net pay.

Question 10

Computation of net pay involves deducting mandatory and voluntary deductions from gross pay.

Accepted Answer

This statement is true as net pay is calculated by subtracting all deductions from gross pay.

Question 11

Which payroll-speciﬁc tool is used to facilitate computation of net pay?
A) Payroll Register
B) Form I-9
C) Employee Information Form
D) Supervisor Payroll Report

Accepted Answer

The Payroll Register is a payroll-specific tool that is used to compute net pay. It contains information on employee earnings, deductions, and net pay for each pay period. The other options listed (Form I-9, Employee Information Form, Supervisor Payroll Report) are not specifically used for computing net pay.

Question 12

Amity is an employee with a period gross pay of $2,000. She elects to have 3% of her gross pay withheld for her 401(k) contribution. What will be her taxable income be for federal income taxes?
A) $1,970
B) $1,940
C) $2,000
D) $1,910

Accepted Answer

Amity's 401(k) contribution is $2,000 x 3% = $60. Her taxable income will be $2,000 - $60 = $1,940.

Question 13

Which of the following statements is/are true about Medicare tax? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes
Left with a question mark will be automatically graded as incorrect.)
A) Additional Medicare tax is withheld for employees who earn more than $150,000 annually.
B) Employers match all Medicare taxes withheld.
C) The Medicare tax rate is 1.45%.
D) All employee earnings less pre-tax deductions are subject to Medicare tax.

Accepted Answer

The answer of Which of the following statements is/are true...

Question 14

Charitable contributions are an example of post-tax voluntary deductions.

Accepted Answer

Charitable contributions are made after taxes have been deducted from an employee's paycheck, making them post-tax deductions.

Question 15

How are income taxes and FICA taxes applied to gross-up pay? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left
With a question mark will be automatically graded as incorrect.)
A) Subtract the sum of the income tax rate and FICA tax rate from 100 percent.
B) Compute the sum of the income tax and FICA tax rates.
C) Divide the net pay by the net tax rate.
D) Multiply the gross pay by the sum of the income tax and FICA tax rates.

Accepted Answer

The answer of How are income taxes and FICA taxes...

Question 16

Garnishments are court-ordered amounts that an employer must withhold from an employee's pre-tax pay and remit to the appropriate authority.

Accepted Answer

Garnishments are indeed court-ordered amounts that an employer must withhold from an employee's wages, but they are typically taken from an employee's after-tax pay, not pre-tax pay.

Question 17

Social Security tax has a wage base, which is the minimum amount an employee must earn before they will have the Social Security tax deduction.

Accepted Answer

The wage base for Social Security tax is actually the maximum amount of earnings subject to the tax, not the minimum.

Question 18

Which of the following federal withholding allowance scenarios will have the highest income tax?
A) Single, 5 allowances
B) Married, 0 allowances
C) Married, 3 allowances
D) Single, 1 allowance

Accepted Answer

The answer of Which of the following federal withholding allowance...

Question 19

Which of the following states do not have state income tax deducted from employee pay? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a
Wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)
A) Montana
B) New Hampshire
C) Maine
D) Alaska

Accepted Answer

The answer of Which of the following states do not...

Question 20

The amount of federal income tax decreases as the number of allowances increases.

Accepted Answer

The number of allowances claimed on Form W-4 can affect the amount of federal income tax withheld from an employee's paycheck. The more allowances claimed, the less tax will be withheld. However, the total amount of tax owed for the year will not change, only the timing of when it is paid.

Quiz 5: Employee Net Pay and Pay Methods

A ﬁrm has headquarters in Indiana but has oﬃces in California and Utah. For employee taxation purposes, it may choose which of those three states income tax laws it wishes to use.

The use of paycards as a means of transmitting employee pay began in the 1990s with over-the-road drivers out of a need to transmit funds reliably on payday.

The regular Medicare tax deduction is 1.45% for employee and employer and must be paid by all employees.

The wage-bracket of determining federal tax withholding yields more accurate amounts than the percentage method.

What role does the employer play regarding an employee's federal withholding tax?

Federal income tax, Medicare tax, and Social Security tax amounts withheld from employee pay are computed based on gross pay, less pre-tax deductions, and deducted to arrive at net pay.

Computation of net pay involves deducting mandatory and voluntary deductions from gross pay.

Which payroll-speciﬁc tool is used to facilitate computation of net pay?

Amity is an employee with a period gross pay of $2,000. She elects to have 3% of her gross pay withheld for her 401(k) contribution. What will be her taxable income be for federal income taxes?

Charitable contributions are an example of post-tax voluntary deductions.

Garnishments are court-ordered amounts that an employer must withhold from an employee's pre-tax pay and remit to the appropriate authority.

Social Security tax has a wage base, which is the minimum amount an employee must earn before they will have the Social Security tax deduction.

Which of the following federal withholding allowance scenarios will have the highest income tax?

The amount of federal income tax decreases as the number of allowances increases.