Deck 8: Payroll Accounting: Employee Earnings and Deductions

Question 1

Match the terms with the definitions.a.outstanding checks
b.cash
c.petty cash voucher
d.automated teller machines
e.change fund
f.internal control
g.credit memos
h.debit memos
Compensation expressed in terms of hours, weeks, or units produced for skilled or unskilled labor is usually referred to as salary.

Answer 1

False

Question 2

Match the terms with the definitions.a.outstanding checks
b.cash
c.petty cash voucher
d.automated teller machines
e.change fund
f.internal control
g.credit memos
h.debit memos
Every individual who performs services for a business is considered to be an employee.

Answer 2

False

Question 3

The Medicare tax rate is subject to a maximum amount.

Answer 3

False

Question 4

The earnings base, against which the FICA tax is applied, and the tax rate have been changed several times since the law was first enacted and can be changed by Congress at any time in the future.

Question 5

Match the terms with the definitions.a.outstanding checks
b.cash
c.petty cash voucher
d.automated teller machines
e.change fund
f.internal control
g.credit memos
h.debit memos
The difference between an independent contractor and an employee is an important legal distinction.

Question 6

The payroll register replaces the general journal in most businesses.

Question 7

Match the terms with the definitions.a.outstanding checks
b.cash
c.petty cash voucher
d.automated teller machines
e.change fund
f.internal control
g.credit memos
h.debit memos
Companies must accumulate payroll data both for the business as a whole and for each employee.

Question 8

Match the terms with the definitions.a.outstanding checks
b.cash
c.petty cash voucher
d.automated teller machines
e.change fund
f.internal control
g.credit memos
h.debit memos
Compensation for managerial or administrative services usually is expressed in biweekly, monthly, or annual terms and is called wages.

Question 9

Match the terms with the definitions.a.outstanding checks
b.cash
c.petty cash voucher
d.automated teller machines
e.change fund
f.internal control
g.credit memos
h.debit memos
The payroll register is a summary of the annual earnings of each employee.

Question 10

Match the terms with the definitions.a.outstanding checks
b.cash
c.petty cash voucher
d.automated teller machines
e.change fund
f.internal control
g.credit memos
h.debit memos
The Fair Labor Standards Act provides that all employees covered by the act must be paid one and one-half times the regular rate for all hours worked over 40 per week.

Question 11

Match the terms with the definitions.a.outstanding checks
b.cash
c.petty cash voucher
d.automated teller machines
e.change fund
f.internal control
g.credit memos
h.debit memos
Employers primarily use the wage-bracket method to determine the amount of tax to be withheld from an employee's pay.

Question 12

Match the terms with the definitions.a.outstanding checks
b.cash
c.petty cash voucher
d.automated teller machines
e.change fund
f.internal control
g.credit memos
h.debit memos
An independent contractor performs a service for a fee and works under the control and direction of the company paying for the service.

Question 13

Match the terms with the definitions.a.outstanding checks
b.cash
c.petty cash voucher
d.automated teller machines
e.change fund
f.internal control
g.credit memos
h.debit memos
The Fair Labor Standards Act requires employees to pay double the regular hourly rate for the time worked on Saturday.

Question 14

Match the terms with the definitions.a.outstanding checks
b.cash
c.petty cash voucher
d.automated teller machines
e.change fund
f.internal control
g.credit memos
h.debit memos
The various government laws and regulations regarding employee deductions, employer payroll taxes, payroll records, and payroll reports apply only to employees and not to independent contractors.

Question 15

Plastic cards or badges encoded with basic employee data are now being used in computer-based time keeping systems.

Question 16

Match the terms with the definitions.a.outstanding checks
b.cash
c.petty cash voucher
d.automated teller machines
e.change fund
f.internal control
g.credit memos
h.debit memos
Government laws and regulations regarding payroll are much more complex for employees than for independent contractors.

Question 17

FICA taxes include amounts for both Social Security but not Medicare programs.

Question 18

Match the terms with the definitions.a.outstanding checks
b.cash
c.petty cash voucher
d.automated teller machines
e.change fund
f.internal control
g.credit memos
h.debit memos
Payroll expenditures represent a relatively small part of the total expenditures of most companies.

Question 19

Separate accounts are kept for each type of earnings deduction.

Question 20

Under federal law, employers are required to withhold a percentage of the employees' wages for pensions.

Question 21

In an electronic system, only the employee number and hours worked need to be entered into a computer each pay period.

Question 22

The Social Security Tax Payable account is debited for Social Security taxes withheld and Social Security taxes imposed on the employer.

Question 23

A purely manual system of record keeping is one in which all records, journals, and ledgers are prepared by hand.

Question 24

Deductions for U.S. savings bond purchases, pension plan payments, and Social Security taxes are considered voluntary deductions.

Question 25

Tracing the employee's gross pay for a specific time period into the appropriate wage-bracket table provided by the Internal Revenue Service is called using the wage-bracket method to determine the amount of tax to be withheld from an employee's pay.

Question 26

A withholding allowance exempts a specific dollar amount of an employee's gross pay from federal income tax withholding.

Question 27

The Federal Insurance Contributions Act requires employers to withhold FICA taxes from employees' earnings.

Question 28

Employers may use the wage-bracket method to determine the amount of tax to be withheld from an employee's pay.

Question 29

An electronic payroll system is one in which data is processed using computers equipped with payroll software.

Question 30

The employee's earnings record is a summary of the earnings of all employees for each pay period.

Question 31

The journal entry to record payroll transactions for the accounting period is to debit Wages and Salaries Expense for the gross pay and credit the appropriate liability and cash accounts.

Question 32

Pension payments are required deductions from an employee's gross earnings.

Question 33

Both manual and electronic payroll systems require the same payroll input and output.

Question 34

Employees Income Tax Payable is a liability account that is credited for the FICA tax withheld from an employee's earnings.

Question 35

Base and rate changes in payroll taxes such as FICA affect the accounting principles and procedures for payroll.

Question 36

Joel Trump is paid one and one-half times the regular hourly rate for all hours worked in excess of 40 hours per week and double time for work on Sunday. Trump's regular rate is $8 per hour. During the week ended October 10, he worked 9 hours each day from Monday through Friday, 6 hours on Saturday, and 4 hours on Sunday. Trump's total earnings for the week ended October 10 are

A) $110.
B) $320.
C) $430.
D) $516.

Question 37

Under federal law, employers are required to withhold certain amounts from the total earnings of each employee to be applied toward the payment of the employee's federal income tax.

Question 38

An employee's total earnings is referred to as gross pay.

Question 39

Unless an employer has only a few employees, manual systems can be inefficient.

Question 40

Whether the wage-bracket method or some other method is used in computing the amount of tax to be withheld, the sum of the taxes withheld from an employee's wages is only an approximation of what the employee's actual taxes will be for the year.

Question 41

Sandra Wilson is paid one and one-half times the regular hourly rate for all hours worked in excess of 40 hours per week and double time for work on Sunday. Wilson's regular rate is $12 per hour. During the week ended July 3, she worked 9 hours each day from Monday through Friday, 6 hours on Saturday, and 4 hours on Sunday. Wilson's overtime earnings for the week ended July 3 are

A) $180.
B) $294.
C) $360.
D) $430.

Question 42

For this text, it is assumed that the maximum amount of earnings subject to FICA taxes is

A) $100,000.
B) $110,500.
C) $105,900.
D) $110,100

Question 43

The account that should be credited for the total income tax withheld from employee's earnings is

A) FICA Tax Payable.
B) FICA Tax Expense.
C) Employee Income Tax Payable.
D) Employee Income Tax Expense.

Question 44

Compensation normally expressed in biweekly, monthly, or annual terms for managerial or administrative services is called

A) supplements.
B) commission.
C) salary.
D) wages.

Question 45

Each employee is required to furnish the employer with which of the following forms?

A) W-2
B) 941
C) W-4
D) 1040

Question 46

The needs of management and the requirements of various federal and state laws make it necessary for employers to keep records that will provide all of the following information for each employee EXCEPT

A) name, address, and Social Security number.
B) gross amount of earnings, date of payment, and period of employment covered by each payroll.
C) gross amount of earnings accumulated since the first of the year.
D) number of hours the employee works as a volunteer for the community.

Question 47

The payroll register for the week ended April 15 for Ultimate Tanning Spa indicates gross earnings of $4,000 and total deductions of $1,200. The journal entry for the payroll for this week would include which of the following credit amounts to Cash?

A) $1,200
B) $2,800
C) $4,000
D) $5,200

Question 48

Employers usually prepare which of the following types of payroll records?

A) payroll register, employee earnings record, and payroll check
B) payroll register, payroll ledger, and employee earnings record
C) payroll journal, employee earning record, and payroll ledger
D) employee earning record, payroll check, and payroll ledger

Question 49

Examples of employees include all of the following EXCEPT

A) secretaries.
B) attorneys.
C) accounting clerks.
D) plant supervisors.

Question 50

Any person who agrees to perform a service for a fee and is not subject to the control of those for whom the service is performed is called a(n)

A) manager.
B) employee.
C) independent contractor.
D) executive.

Question 51

Denise Cruz receives a regular salary of $900 a month and is entitled to overtime pay at the rate of one and one-half times the regular hourly rate for any time worked in excess of 40 hours per week. Cruz's overtime rate of pay is

A) $5.63.
B) $7.79.
C) $8.44.
D) $22.50.

Question 52

The account that is credited with amounts withheld from an employee's earnings for any pension plan contribution is

A) Pension Plan Expense.
B) Pension Plan Taxes Payable.
C) Miscellaneous Expense.
D) Pension Plan Deductions Payable.

Question 53

An amount of an employee's gross pay which is exempt from federal income tax withholding is a(n)

A) additional withholding allowance.
B) withholding allowance.
C) zero bracket amount.
D) special withholding allowance.

Question 54

Federal income tax that is withheld each pay period from the employee's earnings is NOT based on the

A) total earnings of the employee.
B) marital status of the employee.
C) number of withholding allowances claimed by the employee.
D) number of sick days.

Question 55

The Fair Labor Standards Act provides which of the following minimum rates to be paid to employees for all hours worked over 40 hours per week?

A) one and one-half times the regular rate
B) same rate as the regular rate
C) two and one-half times the regular rate
D) two times the regular rate

Question 56

The act that requires most employers to withhold certain amounts from employees' earnings for contributions to the Social Security and Medicare programs is called the

A) Federal Unemployment Tax Act.
B) Federal Withholding Tax Act.
C) State Unemployment Tax Act.
D) Federal Insurance Contributions Act.

Question 57

Form W-4 is a(n)

A) Social Security application form.
B) Employer's Quarterly Federal Tax Return.
C) Employee's Withholding Allowance Certificate.
D) Wage and Tax Statement.

Question 58

Jillian Diaz receives a regular salary of $1,500 a month and is entitled to overtime pay at the rate of one and one-half times the regular hourly rate for any time worked in excess of 40 hours per week. Diaz's overtime pay rate is

A) $6.92.
B) $12.98.
C) $276.92.
D) $1,800.

Question 59

The payroll register for the week ended February 14 for Luxury Homes Construction Company indicates gross earnings of $4,000 and total deductions of $1,200. The entry for the Wages and Salaries Expense ending February 14 would be a

A) $1,200 debit.
B) $2,800 credit.
C) $4,000 debit.
D) $5,200 debit.

Question 60

Cameron Tiller is paid one and one-half times the regular hourly rate for all hours worked in excess of 40 hours per week and double time for work on Sunday. Tiller's regular rate is $12 per hour. During the week ended March 15, he worked 9 hours each day from Monday through Friday, 6 hours on Saturday, and 4 hours on Sunday. Tiller's total regular earnings for the week ended March 15 are

A) $110.
B) $216.
C) $480.
D) $430.

Question 61

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
​Exempts a specific dollar amount of an employee's gross pay from federal income tax withholding.

Question 62

The account that is credited for the Medicare tax withheld from employee's earnings and the Medicare tax imposed on the employer is

A) Medicare Tax Expense.
B) Medicare Tax Payable.
C) Payroll Taxes Expense.
D) Payroll Expense.

Question 63

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
Payroll taxes withheld to provide Social Security and Medicare benefits.

Question 64

Journalize the entry for Hot Rod Service using the following data from the payroll register:

Question 65

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
​Compensation for managerial or administrative services.

Question 66

A separate record of each employee's earnings is called a(n)

A) payroll register.
B) employee earning record.
C) payroll ledger.
D) payroll check.

Question 67

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
​Gross pay less mandatory and voluntary deductions.

Question 68

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
A form used to assemble the data required at the end of each payroll period.

Question 69

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
Someone who works under the control and direction of an employer.

Question 70

The payroll register for the week ended May 28 for J & D United indicates gross earnings of $4,000 and total deductions of $1,200. The total of all the credit entries for the payroll for the week ending May 28 would be

A) $1,200.
B) $2,800.
C) $4,000.
D) $5,200.

Question 71

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
Employers determine the amount to withhold from an employee's gross pay for a specific time period from the appropriate wage-bracket table provided by the Internal Revenue Service.

Question 72

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
An employee's total earnings

Question 73

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
The employee does not handle the paycheck; payment is made by the employer directly to the employee's bank.

Question 74

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
​Requires employers to pay overtime at 1 1/2 times the regular rate to any hourly employee who works over 40 hours in a week.

Question 75

The outputs from a manual or an electronic payroll accounting system include all of the following EXCEPT

A) payroll checks.
B) a payroll register.
C) an employee earnings record.
D) time cards.

Question 76

When a single-check for payroll is prepared and deposited into a special payroll bank account, which of the following entries is made to record the deposit?

A) debit Wages and Salaries Expense; credit Cash
B) debit Payroll Cash; credit Cash
C) debit Cash; credit Payroll Expense
D) debit Cash; credit Wages and Salaries Expense

Question 77

The account that is debited for the total amount of the gross earnings of all employees for each pay period is

A) Wages and Salaries Expense.
B) Payroll Taxes Expense.
C) Miscellaneous Expense.
D) Withdrawal Expense.

Question 78

According to the assumption used in this text, employers are required to withhold Social Security taxes on the first ____ of each employee's earnings.

A) $120,000
B) $105,900
C) $120,000
D) $110,100

Question 79

Match the terms with the definitions.a.direct deposit
b.electronic system
c.employee
d.employee earnings record
e.Fair Labor Standards Act (FLSA)
f.FICA taxes
g.gross pay
h.independent contractor
i.manual system
j.net pay
k.payroll processing center
l.payroll register
m.salary
n.wage-bracket method
o.wages
p.withholding allowance
​Compensation for skilled or unskilled labor.

Question 80

A multi-column form used to assemble, compute, and summarize data for all employees at the end of the payroll period is a(n)

A) payroll register.
B) employee earnings record.
C) payroll ledger.
D) payroll check.