Question 1

Regarding net pay,which of the following statements is incorrect?

Accepted Answer

The net pay amount is important for accounting purposes as it reflects the actual cost of labor for the employer and the actual amount received by the employee.

Question 2

Net pay is the total amount of compensation that an employee takes home after the deductions are made.

Accepted Answer

Net pay is the amount of money an employee actually receives after all the deductions such as taxes, Social Security, Medicare, and other deductions are taken out from their gross pay.

Question 3

Extra compensation items that are not paid directly to an employee are called ________.

Accepted Answer

Benefits are extra compensation items that are not paid directly to an employee, such as health insurance, retirement plans, and vacation time. Bonuses are typically paid directly to the employee as a form of additional payout or reward. Wages and commissions are direct forms of payment for work performed.

Question 4

The current portion of long-term notes payable is ________.

Accepted Answer

The current portion of long-term notes payable refers to the amount of principal that is due within the next year. This portion is reclassified from long-term to current liabilities on the balance sheet to accurately reflect obligations that are due in the short term.

Question 5

Regarding gross and net pay,which of the following statements is correct?

Accepted Answer

Gross pay is the total amount of earnings an employee receives before any deductions are taken out. Net pay is the amount of pay an employee receives after all deductions such as taxes, insurance premiums, and retirement contributions have been subtracted from gross pay. Therefore, option A is correct.

Question 6

Alex,an employee of Super Sunday,Inc. ,has gross salary for March of $5,500.The entire amount is under the OASDI limit of $117,000 and thus subject to FICA.The total amount of employee FICA tax is $841.50.(Assume a FICA-OASDI Tax of 6.2% and FICA-Medicare Tax of 1.45%. )

Accepted Answer

Employee FICA tax = Gross Salary × FICA rate
Employee FICA tax = $5,500 × 7.65% = $420.75

Question 7

Complete the table to show how each type of employee pay is generally stated.
 $$\begin{array} { | l | l | } 
\hline \text { Employee pay } & \text { Generallystated as } \
\hline\text { Salary }\
\hline \text { Wages } & \
\hline \text { Commission } & \
\hline \text { Bonus } & \
\hline \text { Benefits } & \
\hline
\end{array}$$

Accepted Answer

The answer of Complete the table to show how each...

Question 8

The employee federal and state income tax and Social Security tax are optional payroll deductions.

Accepted Answer

The employee federal and state income tax and Social Security tax are mandatory payroll deductions as per the law.

Question 9

________ is a pay amount stated at an hourly rate.

Accepted Answer

A wage is pay that is stated at an hourly rate, whereas a salary is a fixed pay amount usually stated on an annual basis. Commission and bonus are forms of pay that are not stated at an hourly rate.

Question 10

________ is pay stated as a percentage of a sale amount.

Accepted Answer

Commission is a form of pay where a percentage of a sale amount is given as compensation.

Question 11

Aaron earns $24.00 per hour with time-and-a-half for hours in excess of 40 per week.He worked 50 hours at his job during the first week of March 2017.Aaron pays income taxes at 15% and 7.65% for OASDI and Medicare.All of his income is taxable under FICA.Determine Aaron's net pay for the week.

Accepted Answer

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Question 12

Income taxes are withheld from the employee's paycheck.

Accepted Answer

Income taxes are typically withheld from an employee's paycheck by the employer as a prepayment towards the employee's yearly income tax liability.

Question 13

On December 31,2016,Jerry's,Inc.borrowed $500,000 by signing a five-year,8% note payable.The note is payable in five yearly installments of $100,000 plus interest,due at the end of every year beginning on December 31,2017.What amount represents the current portion of Long-term Notes Payable at December 31,2016?

Accepted Answer

The answer of On December 31,2016,Jerry's,Inc.borrowed $500,000 by signing a...

Question 14

On December 31,2016,Circle,Inc.borrowed $500,000 by signing a five-year,8% note payable.The note is payable in five yearly installments of $100,000 plus interest,due at the end of every year beginning on December 31,2017.Which portion is classified as the long-term portion of Notes Payable at December 31,2016?

Accepted Answer

The answer of On December 31,2016,Circle,Inc.borrowed $500,000 by signing a...

Question 15

The old age,survivors,and disability insurance component of FICA tax is imposed on the entire amount of an individual employee's earnings.

Accepted Answer

The amount of tax withheld varies from year to year because the wage base subject to OASDI tax changes each year.

Question 16

Gross pay is the total amount of compensation earned by an employee after the deductions are made.

Accepted Answer

Gross pay is the total amount of compensation earned by an employee before any deductions are made.

Question 17

Rocco earns $14.50 per hour for straight time (40 hours),and the company pays him time-and-a-half for overtime.He worked 46 hours at his job during the first week of March 2017.What was Rocco's gross pay for the week?

Accepted Answer

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Question 18

Gross pay is the total amount of salary,wages,commissions,and bonuses earned by an employee during a pay period,after taxes or any other deductions.

Accepted Answer

Gross pay is the total amount of salary, wages, commissions, and bonuses earned by an employee during a pay period before taxes or any other deductions.

Question 19

Benefits are extra compensation-items that are not paid directly to an employee.

Accepted Answer

Benefits are additional forms of compensation provided to employees in addition to their regular salary or wages. These can include things like health insurance, retirement plans, paid time off, and other perks. They are not paid directly as cash to the employee but are still an important part of their overall compensation package.

Question 20

Which of the following is pay over and above base salary,usually paid for exceptional performance?

Accepted Answer

Bonuses are pay over and above base salary, usually paid for exceptional performance. FICA is a payroll tax, benefits are additional non-salary compensation, and wages are the base pay received for work.

Quiz 11: Current Liabilities and Payroll