Deck 7: Employee Earnings and Deductions

Question 1

The portion of FICA taxes designated as Medicare is paid by

A)employees only.
B)the employer and the federal government.
C)both the employee and the employer.
D)either the employer or the employee, depending on the labor contract.
E)neither the employee nor the employer.

Answer 1

C

Question 2

Net pay is equal to

A)take-home pay plus all deductions.
B)take-home pay minus all deductions.
C)gross pay plus all deductions.
D)gross pay minus all deductions.
E)gross pay minus only federal and state income taxes.

Answer 2

D

Question 3

Types of deductions from employees' earnings include

A)repayment of personal loans from a company credit union.
B)savings through a company credit union.
C)hospital and life insurance premiums.
D)all of these.
E)none of these.

Answer 3

D

Question 4

The total amount of employee compensation before deductions are taken out is referred to as

A)gross pay.
B)net pay.
C)compensation after withholdings.
D)take-home pay.
E)merit pay.

Question 5

All of the following are payroll taxes that are expenses of the employer except

A)FICA Social Security taxes.
B)employee income taxes.
C)state unemployment taxes.
D)federal unemployment taxes.
E)FICA Medicare taxes.

Question 6

In a payroll entry, a credit to Accounts Receivable indicates that

A)an employee is paying a bill owed to the company.
B)a customer is paying a bill owed to the company.
C)the employer is paying a bonus to the employee.
D)a mistake has been made in an employee's paycheck.
E)the company underpaid the employee the previous pay period.

Question 7

Roscoe's employer pays time-and-a-half for all hours worked in excess of 8 hours per day and double time for all hours worked on Sundays. Roscoe's regular hourly rate is $9 per hour. During the week, Roscoe worked the following hours: Monday, 8; Tuesday, 8; Wednesday, 9; Thursday, 10; Friday, 8; Sunday, 6. Total gross wages are

A)$661.50.
B)$540.00.
C)$441.00.
D)$481.50.
E)$508.50.

Question 8

An amount of an individual's earnings that is exempt from income taxes is called a(n)

A)bonus.
B)employee deduction.
C)withholding allowance.
D)salary.
E)premium.

Question 9

An employer may withhold portions of an employee's total earnings for

A)state and county sales taxes.
B)charitable contributions.
C)local property taxes.
D)state unemployment taxes.
E)federal unemployment taxes.

Question 10

Types of compensation that an employee might receive include

A)a bonus.
B)cost of living adjustments.
C)profit sharing.
D)a commission.
E)all of these.

Question 11

For which of the following taxes is there a ceiling on the amount of annual employee earnings subject to the tax?

A)Only the FICA tax
B)Only the FICA tax and the federal unemployment tax
C)Only the state and federal unemployment taxes
D)The FICA Social Security tax and the state and federal unemployment taxes
E)Only the FICA Medicare tax

Question 12

Prior to the last weekly payroll period of this year, the cumulative earnings of Lenz and Trent are $84,000 and $60,320, respectively. Their earnings for the present pay period ending December 18, are Lenz, $2,310, and Trent, $2,010. Assuming that the Social Security tax is 6.2 percent on the first $113,700 paid during the calendar year and the Medicare tax is 1.45 percent on all earnings paid during the calendar year, the total amount of FICA taxes withheld this payroll period for both Lenz and Trent is

A)$62.64.
B)$267.84.
C)$187.27.
D)$125.28.
E)none of these.

Question 13

All of the following are optional deductions except

A)charitable contributions.
B)medical insurance.
C)union dues.
D)Medicare tax.
E)life insurance.

Question 14

To examine in detail the weekly payroll figures of all employees, one would look at

A)the payroll register.
B)the employee's individual earnings record.
C)time cards.
D)Form W-4.
E)the general ledger.

Question 15

Regarding the federal income tax withholding tables, the amount of each employee's earnings withheld is affected by the

A)number of exemptions claimed.
B)age of the employee.
C)number of years working for the company.
D)state where the employer is located.
E)number of years the company has been in business.

Question 16

The structure of the payroll entry to record the payroll is

A)debit Wages Payable; credit each employee deduction.
B)debit Wages Payable; credit Cash.
C)debit Wages Expense; credit each employee deduction; credit Salaries Payable.
D)debit Wages Expense; credit each employee deduction.
E)debit Wages Payable; credit Sales Expense; and credit Cash.

Question 17

The employer records the amount of federal income tax withheld as

A)an expense.
B)an asset.
C)payroll tax expense.
D)a liability.
E)a contra asset.

Question 18

A person who performs a service for a fixed amount and is not under the specific direction of the party being served is called

A)an employer.
B)an employee.
C)an independent contractor.
D)either an employer or an employee.
E)a company's manager.

Question 19

Mindy receives an annual salary of $25,500 plus a 5 percent commission on all sales during the year in excess of $100,000. Her sales for the year total $210,000. Her total earnings amount to

A)$31,000.
B)$26,775.
C)$36,000.
D)$30,500.
E)$25,500.

Question 20

For which of the following taxes is there no ceiling on the amount of annual employee earnings subject to the tax?

A)Federal income tax
B)Federal unemployment tax
C)FICA SS tax
D)Charitable contributions tax
E)State unemployment tax

Question 21

Julie is employed as a salesperson at ABC Motors. She receives a salary of $1,200 a month, plus 15% commissions on the profit from her sales during the month. If Julie's sales profit for August is $25,000 what is her total gross pay?

A)$1,200
B)$3,750
C)$2,550
D)$4,950

Question 22

The Fair Labor Standards Act of 1938 provides for

A)Minimum standards for wages and overtime
B)Provisions for child labor and equal pay for equal work
C)Exemptions for specified employees
D)All of the Above

Question 23

Employees may be paid hourly or salary based on the following:

A)Type of work performed
B)Period of time covered
C)The employer's discretion
D)A & B

Question 24

The Social Security Act of 1935 was originally enacted to provide

A)Benefits for Spouses
B)Benefits for Minor Children
C)Benefits for Retired Workers
D)Disability Insurance

Question 25

A law that regulates overtime earnings is called:

A)Federal Unemployment Tax Act
B)Tax Payment Act
C)Fair Labor Standards Act
D)Federal Insurance Contribution Act

Question 26

The record maintained for each employee, listing the current data on that employee's earnings for the period, deductions, and accumulated earnings, is the

A)employee's individual earnings record.
B)payroll register.
C)employee's wage and tax statement.
D)employee's withholding allowance (W-4) certificate.
E)Social Security record statement.

Question 27

What item is NOT used to calculate the federal income tax to be withheld by employers

A)Total Earnings
B)W-2
C)Publication 15 (Circular E)
D)W-4

Question 28

John Smith is paid $15 per hour and he worked 35 hours during the week. What is John's gross pay?

A)$450
B)$525
C)$975
D)$1050

Question 29

What are the two parts of FICA taxes

A)Medical and Disability
B)Social Security and Disability
C)Social Security and Medicare
D)FUTA and SUTA

Question 30

The 941 employer's tax payment to the IRS consists of

A)Employee's FICA Withheld
B)Employer's matching FICA
C)Employee's federal income tax withheld
D)A & B
E)All of the Above

Question 31

Bill Jones was hired as an apple picker. Bill's pay will be based on a piece-rate system at the rate of $4.50 per bag of apples picked. If Bill picks 20 bags a day, and works 4 days a week, what are his total earnings.

A)$18
B)$90
C)$360
D)$450

Question 32

Sally worked 45 hours during the week at an hourly rate of $10 per hour. Assume that Sally's overtime rate is paid at time and a half over 40 hours. What is Sally's gross pay for the week?

A)$325
B)$450
C)$475
D)$675

Question 33

Stacey works 38 hours in a week. How many hours of overtime will Stacey be paid?

A)0
B)3
C)8
D)Can't be determined from information

Question 34

The employee's individual earnings record includes

A)gross payroll for the pay period for all employees.
B)net payroll for the pay period for all employees.
C)the date the employee was hired.
D)the amount of federal unemployment taxes for the pay period.
E)the total amount of FICA and Medicare tax paid by the company for all employees.

Question 35

Flexible spending plans and 401(k) deductions are normally considered

A)Tax free earnings
B)Pre-tax deductions
C)Post-tax deductions
D)Normal tax deductions

Question 36

The following payroll taxes that are strictly the employer's responsibility

A)SUTA
B)FUTA
C)FICA SS Employee Withheld
D)Federal Tax Withheld
E)A & B

Question 37

The source of information for the employee's individual earnings record is

A)the payroll register.
B)Form W-2.
C)Form W-4.
D)employees' time cards.
E)the general ledger.

Question 38

Which of the following payroll taxes is the employee's responsibility

A)Federal Income Tax, FICA SS & Medicare, FUTA
B)Federal Income Tax, FUTA, SUTA
C)Federal Income Tax, FICA SS & Medicare
D)FICA SS & Medicare, FUTA, SUTA

Question 39

Mary Reeves has gross wages of $1,500 for the week ending October 24. Mary's total accumulated gross wages earned this year, prior to this payroll, is $75,000. If the FICA rates are: Social Security: 6.2% on a limit of $113,700 and Medicare 1.45%. What are Mary's FICA-Social Security and FICA-Medicare taxes for the week?

A)$0; $21.75
B)$93.00; $0
C)$93.00; $21.75
D)There isn't enough information to calculate

Question 40

The Federal Insurance Contributions Act provides for which of the following

A)Retirement benefits when workers reach 62
B)Benefits for workers who become disabled after age 65
C)Health insurance for people after age 70
D)None of the above

Question 41

Mary Reeves has gross wages of $3,000 for the week ending October 30. Mary's total accumulated gross wages earned this year, prior to this payroll, is $114,150. If the FICA rates are: Social Security: 6.2% on a limit of $113,700 and Medicare 1.45%. What are Mary's FICA-Social Security and FICA-Medicare taxes for the week?

A)$0; $43.50
B)$186.00; $43.50
C)$186.00; $0
D)$0; $0

Question 42

An example of who is NOT most likely under the direct control of an employer and classified as an independent contractor.

A)Clerical Worker
B)Factory Worker
C)Janitor
D)Janitorial Service

Question 43

A plumber who sets his own work schedule is an example of:

A)Independent Contractor
B)Employee
C)Employer
D)Freelancer

Question 44

Derrick Elder works 46 hours at a bakery, earning $13.50 per hour. Calculate Derrick's weekly pay assuming his overtime rate is 1.5.

A)$621.00
B)$661.50
C)$702.00
D)$931.50

Question 45

The W-4 form lists all of all of the following EXCEPT one:

A)Lists the number of allowances claimed
B)Shows the filing status
C)Lists the employee's Social Security Number
D)Lists the total wages to be earned

Question 46

A law that protects employees and dependents against losses due to death or injury on the job is:

A)Fair Labor Standards Act
B)Federal Wage and Hour Act
C)Worker's Compensation Laws
D)Social Security Act of 1935

Question 47

Mary Reeves has gross wages of $2,500 for the week ending October 30. Mary's total accumulated gross wages earned this year, prior to this payroll, is $111,900. If the FICA rates are: Social Security: 6.2% on a limit of $113,700 and Medicare 1.45%. What are Mary's FICA-Social Security and FICA-Medicare taxes for the week?

A)$0; $36.25
B)$155.00; $36.25
C)$155.00; $0
D)$111.60; $36.25

Question 48

A carpenter who decides his own hours is an example of an independent contractor.

Question 49

James received $650 for working 40 hours. What is the hourly rate of pay for James?

A)$16.00
B)$16.04
C)$16.25
D)$16.50

Question 50

Which of the allowances listed below would have the most amount of taxes withheld for federal income tax purposes?

A)S-0
B)S-1
C)S-2
D)S-3

Question 51

A twelve-month period beginning on January 1 and ending on December 31 of the same year is called a:

A)Fiscal Year
B)Annual Year
C)Accounting Year
D)Calendar Year

Question 52

In a payroll journal entry, a credit to Federal Withholding Tax Payable indicates

A)Federal taxes have been withheld from the employee and are a liability until paid to the governing agency
B)Federal taxes have been paid to the governing agency
C)Federal taxes are due to be withheld from the employee
D)None of the above

Question 53

Net pay is the same as

A)Total earnings
B)Take home pay
C)Earnings before taxes
D)Pay before deductions

Question 54

Ashley earns an hourly rate of $15 and worked 48 hours in one week. She had taxes withheld totaling $175 and union dues deducted for $50. Assuming that Ashley receives overtime at a rate of 1.5 what would her net earnings be for the week?

A)$495
B)$555
C)$605
D)$225

Question 55

Totals for payroll journal entries are obtained from:

A)a payroll register
B)an employee's pay check
C)a W-4 statement
D)a payroll bank account

Question 56

The payroll register contains all of the following except:

A)Hours Worked
B)Cumulative Earnings
C)Federal Income Tax
D)W-4 Form

Question 57

Which of the following statements is true about FICA Social Security and Medicare?

A)Employers match the employee's deduction for FICA taxes.
B)Only employees have this deduction
C)Only employers are responsible for FICA taxes
D)Both FICA Social Security and Medicare have no wage ceilings

Question 58

Jerry Whiten is paid a commission of 15% on sales he makes for XYZ Motors. What are Jerry's total earnings if he sold $55,000 last month?

A)$46,750
B)$8,250
C)$63,250
D)None of the above

Question 59

Which of the following would NOT be an employee payroll deduction?

A)Federal Income Tax
B)State Income Tax
C)401(k)
D)FUTA

Question 60

Pre-tax deductions mean

A)Taxes are calculated before deductions
B)Employee deductions that are not subject to income tax
C)Employees are subject to all taxes on the deduction
D)Taxes are optional

Question 61

Optional deductions would include employee income tax, Social Security tax, union dues, and insurance premiums.

Question 62

There is no limit on each employee's total earnings that are subject to Medicare tax.

Question 63

Gross pay is the total amount of salary or wages before deductions and taxes.

Question 64

Net pay is calculated as gross pay plus the FICA tax and the Medicare tax.

Question 65

Social Security taxes and Medicare taxes are paid by both the employer and the employee.

Question 66

Money paid to a person for managerial or administrative services is usually called wages, and the time period covered is usually hours or weeks.

Question 67

Employees who are paid a regular salary are not entitled to premium pay for overtime.

Question 68

Gross pay less one or more deductions equals net pay.

Question 69

Federal unemployment laws protect employees and their dependents against losses due to death or injury incurred on the job.

Question 70

The payroll register contains the earnings of all the employees for the pay period.

Question 71

If an employee earning $10 per hour works 46 hours, the gross pay would amount to $490, assuming time-and-a-half for over 40 hours worked per week.

Question 72

Assume that the last payroll period for the year ends on December 26. Prior to the last payroll period, Roger's cumulative earnings are $67,500. If the Social Security tax is 6.2 percent of the first $113,700 and the Medicare tax is 1.45 percent of all earnings, then Roger's deduction for total FICA taxes on the $5,200 gross earnings for the last payroll period would be $322.40.

Question 73

There is no ceiling on each employee's total earnings that are subject to federal income tax.

Question 74

All payroll deductions withheld from employees become an expense for the employer.

Question 75

The Medicare tax is 6.2 percent of unlimited gross earnings.

Question 76

An independent contractor is one who is under the direct control of an employer.

Question 77

State and federal unemployment taxes are two required payroll deductions for employees.

Question 78

The amount of federal income tax withheld from an employee's paycheck is affected by whether the employee claims to be single or married on the W-2 form.

Question 79

An employee's total earnings for a payroll period are called gross pay.

Question 80

A person who works for compensation under the direction and control of the employer is called an independent contractor.