Question 1

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.

Question 2

The self-employment tax rate is double the rate of

Accepted Answer

The self-employment tax rate includes both Social Security and Medicare taxes, which are both taxes paid by employees and employers in traditional employment situations. The self-employed individual is responsible for paying both the employee and employer portions of these taxes, which results in a higher tax rate than what is typically paid by employees. FUTA and SUTA taxes are not included in the self-employment tax rate, and property taxes are a completely different type of tax.

Question 3

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

Accepted Answer

When Social Security taxes are paid to the IRS, cash is decreased and Social Security tax liability is reduced. Therefore, the correct entry would be to debit Social Security Tax Payable and credit Cash.

Question 4

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

Accepted Answer

An Employer Identification Number (EIN) is obtained from the Internal Revenue Service (IRS) in order to identify an employer for tax purposes. This is not something that is obtained from a bank or any other government agency like the Federal Reserve or the CIA.

Question 5

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) is a tax program that provides unemployment benefits to workers who have lost their jobs due to no fault of their own. It also has a merit-rating system that rewards employers who provide regular employment for their workers by lowering their tax rate. This system encourages employers to create more stable job opportunities for their employees. FICA (Federal Insurance Contributions Act) is a payroll tax that funds Social Security and Medicare programs, while FUTA (Federal Unemployment Tax Act) is a federal tax that finances state unemployment programs. Workers' compensation insurance is a type of insurance that provides benefits to employees who have suffered work-related injuries or illnesses. None of these programs have a merit-rating system to encourage regular employment.

Question 6

The federal unemployment tax is levied on

Accepted Answer

The federal unemployment tax (FUTA) is a tax on employers, based on the wages of their employees. It is not deducted from employees' earnings.

Question 7

Employers may deposit Social Security and Medicare taxes at a Federal Reserve Bank or other authorized commercial bank using

Accepted Answer

Form 8109 is used to make federal tax deposits, including Social Security and Medicare taxes, at an authorized commercial bank. Form W-2 is used to report wages and salaries to employees, Form 940 is used to report federal unemployment tax, and Form 941 is used to report quarterly payroll taxes.

Question 8

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

Accepted Answer

The employer pays the employer's Social Security and Medicare taxes to the Internal Revenue Service.

Question 9

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 employer pays $26.35 + $6.16 + $3 + $9 = $44.51 in taxes.

The total cost of Melissa to her employer is her gross earnings plus the taxes her employer pays on her behalf:

$425 + $44.51 = $469.51.

Question 10

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

Accepted Answer

The payroll register is a document that tracks all employee wage and salary payments as well as deductions and withholdings for taxes and benefits. This information is necessary for calculating and remitting employer payroll taxes. The other options (statement of owner's equity, end-of-period balance sheet, and employees' check stubs) do not provide the necessary information for computing employer payroll taxes.

Question 11

Form 941 is a(n)

Accepted Answer

Form 941 is the Employer's Quarterly Federal Tax Return that is used to report employment taxes, including federal income tax withholdings, Social Security taxes, and Medicare taxes. It is filed by employers on a quarterly basis.

Question 12

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 will no longer have any outstanding balance, resulting in a zero balance.

Question 13

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 14

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 includes not only the gross earnings of the employee, but also payroll taxes, benefits, and other expenses related to employment. Therefore, the total payroll cost is likely to be more than the gross earnings of the employee. The exact amount will depend on the employer's specific payroll expenses.

Question 15

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

Accepted Answer

To journalize employer's payroll taxes, we need to credit the liabilities which are accrued during the payroll period. Social Security Tax Payable, Medicare Tax Payable, and FUTA Tax Payable are all liability accounts that are credited while journalizing employer's payroll taxes. On the other hand, Payroll Taxes Expense is a debit account that is used to record the total cost that an employer incurs while paying payroll taxes. Therefore, the only account we do not have to credit while journalizing the employer's payroll taxes is Payroll Taxes Expense.

Question 16

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

Accepted Answer

The Circular E--Employer's Tax Guide is published by the IRS and provides guidance to employers on how to comply with federal tax withholding and deposit requirements, including Social Security and Medicare taxes. The other options listed are not relevant to this topic.

Question 17

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 18

A self-employment tax is a contribution to the

Accepted Answer

Self-employment tax is a contribution to the Social Security and Medicare programs. This tax is paid by individuals who work for themselves, like freelancers or independent contractors, to ensure they contribute to these programs just like employees do through payroll taxes.

Question 19

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 20

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

Accepted Answer

According to the IRS, a self-employment tax is required if an individual earns $400 or more in net income from self-employment during the year.

Quiz 9: Payroll Accounting: Employer Taxes and Reports