Question 1

Withholding for federal income taxes places employees on a pay-as-you-go basis.

Accepted Answer

Withholding for federal income taxes means that a portion of an employee's paycheck is set aside by their employer to cover their income tax liability. This system ensures that employees pay their taxes throughout the year, rather than being required to pay a lump sum at the end of the year. This is essentially a pay-as-you-go system.

Question 2

If an employee whose regular hourly rate is $9 and whose overtime rate is 1.5 times the regular rate works 42 hours in one week, the employee's gross pay is $567.

Accepted Answer

The employee's gross pay for the week would be $409.50. This is calculated by paying the regular rate ($9) for the first 40 hours, totaling $360, and then paying the overtime rate (1.5 times the regular rate, which is $13.50) for the 2 extra hours, adding $27 ($13.50 x 2) to the total.

Question 3

Which of the following statements is not correct?
A)The SUTA tax protects employees against losses from job-related injuries or illnesses.
B)The FUTA tax provides benefits for employees who become unemployed.
C)The federal unemployment tax rate can be reduced by the rate charged by state for the state unemployment tax.
D)The earnings base for the federal and state unemployment taxes are the same, the first $7,000 of an employee's earnings for the year.

Accepted Answer

The SUTA tax does not protect employees against losses from job-related injuries or illnesses. It is a tax paid by employers to fund state-administered unemployment compensation programs, which provide temporary financial assistance to eligible unemployed workers who become unemployed through no fault of their own.

Question 4

An employee whose regular hourly rate is $10 and whose overtime rate is 1.5 times the regular rate worked 44 hours in one week. In the payroll register, the employer should record an overtime premium of
A)$440.
B)$20.
C)$220.
D)$5.

Accepted Answer

The overtime premium is the extra amount paid for hours worked beyond the standard 40-hour workweek. The employee worked 4 hours of overtime (44 - 40 = 4 hours). The overtime rate is 1.5 times the regular rate, so the overtime premium per hour is $10 * 0.5 = $5. For 4 hours of overtime, the total overtime premium is 4 * $5 = $20.

Question 5

The Medicare tax is levied to provide medical care for the employee and the employee's spouse after they reach age 65.

Accepted Answer

The Medicare tax is a payroll tax that is used to provide medical insurance coverage for individuals who are 65 or older, as well as individuals with certain disabilities or end-stage renal disease. The tax is typically split evenly between employers and employees, and it is separate from Social Security taxes.

Question 6

If an employee works for more than one employer during the year, the social security tax is deducted and matched by only one employer.

Accepted Answer

Each employer is required to deduct and match Social Security taxes without regard to what other employers may have deducted. The Social Security tax applies up to the annual wage limit for each job independently.

Question 7

Federal law requires employers to pay which of the following employment related taxes?
A)Federal and state income tax, social security tax, Medicare tax, and FUTA.
B)FICA tax, federal and state income tax and federal unemployment compensation tax
C)only federal and state unemployment compensation tax
D)FICA tax and federal unemployment compensation tax

Accepted Answer

Federal law requires employers to pay FICA tax, which includes Social Security and Medicare taxes, and federal unemployment compensation tax (FUTA). State income tax is not a federal requirement, and employers do not pay federal and state income taxes on behalf of employees.

Question 8

Federal law requires employers to withhold which of the following taxes from the employee's pay?
A)Federal and state income tax, social security tax, Medicare tax, and FUTA.
B)federal income tax, social security tax, Medicare tax, and state and local taxes.
C)federal income tax, social security tax, and Medicare tax.
D)federal income tax, social security tax, Medicare tax, and FUTA.

Accepted Answer

Federal law mandates that employers withhold federal income tax, social security tax, and Medicare tax from employees' paychecks. FUTA (Federal Unemployment Tax Act) taxes are paid by employers and are not withheld from employees' wages. State and local taxes may also be withheld, but this varies by location and is not a federal requirement.

Question 9

The employer records the amount of federal income tax withheld from employees as
A)Social Security Tax Expense.
B)Social Security Tax Payable.
C)Income Tax Expense.
D)Employee Federal Income Tax Payable.

Accepted Answer

The amount of federal income tax withheld from employees is recorded as Employee Federal Income Tax Payable, as it represents funds withheld from employees' paychecks that are owed to the federal government on their behalf. It is not recorded as Social Security Tax Expense or Payable, as that tax is separate from federal income tax. Similarly, it is not recorded as Income Tax Expense, as that refers to the amount of income tax the company itself owes, not the amount withheld from employees' paychecks.

Question 10

Time sheets or time cards are used to keep a record of hours worked each day by each employee paid on an hourly basis.

Accepted Answer

Time sheets or time cards are commonly used in organizations to keep track of hours worked by employees paid on an hourly basis. The information captured on time sheets is then used to calculate pay, including regular pay, overtime, and any other applicable earnings or deductions.

Question 11

The employee's marital status is one factor that determines the amount of federal income tax withheld by the employer.

Accepted Answer

The employee's marital status is one of the factors that determine the amount of federal income tax withheld by the employer. Other factors include the employee's salary, number of allowances claimed, and whether the employee has requested additional withholding.

Question 12

Which of the following statements is not correct?
A)Medicare taxes are levied in an equal amount on both employers and employees.
B)The amount of social security tax withheld depends on an employee's gross earnings, marital status, and number of withholding allowances.
C)Once an employee's year-to-date wages reach a certain amount prescribed by law, social security tax is no longer withheld.
D)Federal law requires that social security, Medicare, and federal income taxes be deducted from the gross pay of most employees.

Accepted Answer

The amount of social security tax withheld depends solely on an employee's gross earnings and does not vary with marital status or number of withholding allowances. These factors affect federal income tax withholding, not social security tax.

Question 13

Which of the following statements is correct?
A)All employees must be paid no more than the minimum wage rate set by the Fair Labor Standards Act.
B)Disability benefits for the worker and the worker's dependents are provided by the Federal Insurance Contributions Act.
C)A company is required to withhold various employee taxes from amounts paid independent contractors.
D)The accountant who performs the independent audit for a company is an employee of the company.

Accepted Answer

Disability benefits for the worker and their dependents are provided by the Federal Insurance Contributions Act (FICA). The Fair Labor Standards Act (FLSA) sets minimum wage rates, but employees can be paid more than the minimum wage. A company is not required to withhold taxes from payments made to independent contractors. An independent audit is performed by an external auditor, who is not an employee of the company.  Therefore, option B is the correct statement.

Question 14

Employees submit Form W-4 to their employers to show the number of withholding allowances they claim for federal income tax withholding purposes.

Accepted Answer

Employees do submit Form W-4 to their employers to show the number of withholding allowances they claim for federal income tax withholding purposes.

Question 15

The net amount due employees for their wages is recorded as a debit to Salaries and Wages Payable.

Accepted Answer

The net amount due to employees for their wages is recorded as a credit to Salaries and Wages Payable, as it represents a liability the company owes to its employees. A debit would be recorded to Salaries and Wages Expense to reflect the cost of employee services.

Question 16

The overtime rate is usually one and one-half times the regular hourly rate.

Accepted Answer

This is a common standard for overtime pay in many industries and under the Fair Labor Standards Act in the United States.

Question 17

When a firm records its payroll, the amount of federal income tax withheld from employees is entered as a liability.

Accepted Answer

When a firm withholds federal income tax from its employees' paychecks, it is liable to remit that tax to the government. Therefore, the amount of federal income tax withheld from employees is recorded as a liability until it is paid to the government.

Question 18

Identify the statement below that is not true regarding social security tax. A)Social security is sometimes referred to as FICA. B)In any given year, there is no limit on the amount of wages subject to social security tax. C)Both the employee and the employer pay an equal amount of social security tax on the employee's wages. D)The social security tax provides benefits for retirement as well as worker disability.

Accepted Answer

In any given year, there is a limit on the amount of wages subject to social security tax. This limit is adjusted annually and is referred to as the "Social Security Wage Base." As of 2021, the wage base is $142,800, meaning that any wages earned above this amount are not subject to social security tax for the year.

Question 19

The maximum base for the social security tax is the same as that for the Medicare tax.

Accepted Answer

The maximum base for Social Security tax applies only to a certain amount of earnings, which is adjusted annually, whereas Medicare tax applies to all earnings without a maximum limit.

Question 20

Publication 15, Circular E contains federal income tax withholding tables.

Accepted Answer

Publication 15, Circular E contains federal income tax withholding tables.

Quiz 10: Payroll Computations, Records, and Payment

Withholding for federal income taxes places employees on a pay-as-you-go basis.

If an employee whose regular hourly rate is $9 and whose overtime rate is 1.5 times the regular rate works 42 hours in one week, the employee's gross pay is $567.

Which of the following statements is not correct?

An employee whose regular hourly rate is $10 and whose overtime rate is 1.5 times the regular rate worked 44 hours in one week. In the payroll register, the employer should record an overtime premium of

The Medicare tax is levied to provide medical care for the employee and the employee's spouse after they reach age 65.

If an employee works for more than one employer during the year, the social security tax is deducted and matched by only one employer.

Federal law requires employers to pay which of the following employment related taxes?

Federal law requires employers to withhold which of the following taxes from the employee's pay?

The employer records the amount of federal income tax withheld from employees as

Time sheets or time cards are used to keep a record of hours worked each day by each employee paid on an hourly basis.

The employee's marital status is one factor that determines the amount of federal income tax withheld by the employer.

Which of the following statements is not correct?

Which of the following statements is correct?

Employees submit Form W-4 to their employers to show the number of withholding allowances they claim for federal income tax withholding purposes.

The net amount due employees for their wages is recorded as a debit to Salaries and Wages Payable.

The overtime rate is usually one and one-half times the regular hourly rate.

When a firm records its payroll, the amount of federal income tax withheld from employees is entered as a liability.

Identify the statement below that is not true regarding social security tax.

The maximum base for the social security tax is the same as that for the Medicare tax.

Publication 15, Circular E contains federal income tax withholding tables.