Question 1

To journalize the employer's payroll taxes,we need to credit all of the following accounts EXCEPT

Accepted Answer

We need to credit the liability accounts such as Social Security Tax Payable, Medicare Tax Payable, and FUTA Tax Payable for the employer's payroll taxes. Payroll Taxes Expense is a debit account that is increased when recording the total amount of employer's payroll taxes paid.

Question 2

A self-employment tax is a contribution to the

Accepted Answer

A self-employment tax is a contribution to Social Security and Medicare programs. As a self-employed individual, you are responsible for paying both the employer and employee portions of these taxes. This contribution goes towards funding retirement benefits and healthcare for you and other eligible individuals. Choices A, B, and C are not applicable as they do not relate to self-employment taxes.

Question 3

The employer pays which of the following to the Internal Revenue Service?

Accepted Answer

The employer pays their own portion of Social Security and Medicare taxes (known as FICA taxes) to the Internal Revenue Service. This is a tax that is based on the employee's earnings and is split between the employer and employee. Sales taxes and property taxes are typically paid by individuals, businesses, or property owners directly to their respective state or local government. The option of "no taxes" is not a valid choice as all employers are required to pay taxes of some kind, including FICA taxes.

Question 4

The self-employment tax rate is double the rate of

Accepted Answer

The self-employment tax rate consists of both Social Security and Medicare taxes, which are each charged at a rate of 6.2% and 1.45%, respectively. Since self-employed individuals must pay both the employer and employee portions of these taxes, their total rate is double that of employees who only pay the employee portion of Social Security and Medicare taxes. FUTA and SUTA taxes are not related to self-employment taxes, and property taxes are a separate type of tax altogether.

Question 5

A self-employment tax is required of an individual who owns his or her own business and makes

Accepted Answer

A self-employment tax is required when an individual earns $400 or more in net profit from their business. This tax is designed to cover the individual's portion of Medicare and Social Security taxes, which are typically paid by employers for their employees. Therefore, if an individual is self-employed, they are responsible for paying both the employer and employee portions of these taxes.

Question 6

The date on which an employer must pay Social Security and Medicare taxes is

Accepted Answer

The due date for paying Social Security and Medicare taxes depends on the amount of the taxes owed, as the IRS has different deadlines and requirements based on the tax liability of the employer.

Question 7

An Employer Identification Number (EIN)is obtained by the employer from the

Accepted Answer

An Employer Identification Number (EIN) is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses for tax purposes. It is used as a means of identification on tax returns and other business documents. The nearest Federal Reserve Bank, CIA, or local federally insured bank do not provide EINs.

Question 8

To journalize the payment of Medicare taxes to the IRS,the correct entry would be

Accepted Answer

The payment of Medicare taxes is made in cash, so the account Cash should be credited. The amount paid is recorded as a decrease in Medicare Tax Payable, so this account is debited. Select option C as it correctly reflects this.

Question 9

A key source of information for computing employer payroll taxes is the

Accepted Answer

The payroll register is a document that summarizes all of the payroll data for each employee, including wages, taxes withheld, and other deductions. This document is used to calculate and report employer payroll taxes to government agencies. The statement of owner's equity and end-of-period balance sheet are not directly related to payroll and the employees' check stubs contain individual employee payroll information but do not provide the overall payroll tax information needed for reporting purposes.

Question 10

The employer usually pays the entire cost of

Accepted Answer

Workers' Compensation Insurance is typically paid entirely by the employer. FICA taxes are split between the employer and employee, while medical and disability insurance costs vary and may be partially covered by the employee.

Question 11

The rules by which employers must deposit Social Security and Medicare taxes can be found in the

Accepted Answer

Circular E--Employer's Tax Guide is a publication by the IRS that provides guidelines for employers on how to deposit Social Security and Medicare taxes. The other options do not provide information specifically related to Social Security and Medicare tax deposits.

Question 12

Employers who have $100,000 or more due in federal income tax withholding and Social Security and Medicare taxes on any day during the current quarter should journalize the debt and pay at the end of the

Accepted Answer

Employers with $100,000 or more due in federal income tax withholding and Social Security and Medicare taxes on any day during the current quarter are required to deposit the taxes by the next banking day.

Question 13

The federal unemployment tax is levied on

Accepted Answer

The federal unemployment tax is levied solely on employers and is not deducted from employees' earnings. This tax, part of the Federal Unemployment Tax Act (FUTA), funds state workforce agencies and unemployment insurance.

Question 14

When all taxes have been paid,the Social Security Tax Payable account will have

Accepted Answer

When all taxes have been paid, the Social Security Tax Payable account should have a zero balance because there are no more taxes owed or due.

Question 15

Form 941 is a(n)

Accepted Answer

Form 941 is the Employer's Quarterly Federal Tax Return, used to report income taxes, Social Security tax, and Medicare tax withheld from employees' paychecks and the employer's portion of Social Security and Medicare taxes.

Question 16

Which of the following tax programs often has a merit-rating system to encourage employers to provide regular employment for workers?

Accepted Answer

SUTA (State Unemployment Tax Act) often has a merit-rating system to encourage employers to provide regular employment for workers. This means that employers who have a low turnover rate and who retain employees for longer periods of time can receive lower tax rates on their unemployment insurance payments than employers who have high turnover rates. FICA (Federal Insurance Contributions Act) is a payroll tax that funds Social Security and Medicare programs, FUTA (Federal Unemployment Tax Act) is an employer tax that funds state unemployment programs, and workers' compensation insurance is a state-run program that provides benefits to employees who are injured on the job. None of these programs typically have a merit-rating system.

Question 17

The total payroll cost to an employer of an employee who has gross earnings of $78,000 is

Accepted Answer

The total payroll cost to an employer is not just the gross earnings of an employee. It includes additional costs such as employer-paid taxes, benefits, and other expenses. Therefore, the total payroll cost would be more than $78,000.

Question 18

Employers who have less than $2,500 due in federal income tax withholding and Social Security and Medicare taxes at the end of the quarter should journalize the debt and pay at the end of the

Accepted Answer

The answer of Employers who have less than $2,500 due...

Question 19

Melissa Taylor has gross earnings of $425 and withholdings of $26.35 for Social Security tax,$6.16 for Medicare tax,and $35 for federal income tax.Her employer pays $26.35 for Social Security tax,$6.16 for Medicare tax,$3 for FUTA tax,and $9 for SUTA tax.The total cost of Melissa to her employer is

Accepted Answer

Melissa's total withholdings are $26.35 + $6.16 + $35 = $67.51
Her gross earnings minus withholdings are $425 - $67.51 = $357.49, which is her net pay.
The cost to her employer is the sum of all taxes paid by the employer, which is $26.35 + $6.16 + $3 + $9 = $44.51.
So the total cost of Melissa to her employer is $357.49 + $44.51 = $402.
However, the question asks for the total cost, not just the cost to the employer. Therefore, we need to add Melissa's withholdings back in to get the total cost, which is $402 + $67.51 = $469.51. 
Therefore, the best choice is C.

Question 20

After estimating its payroll for the year,an employer usually pays workers' compensation insurance

Accepted Answer

Workers' compensation insurance premiums are often paid at the beginning of the year, based on an estimate of the year's payroll. Adjustments may be made later if actual payroll differs from the estimate.

Quiz 9: Payroll Accounting: Employer Taxes and Reports