Question 1

Net pay equals:

Accepted Answer

Net pay is the amount of money an employee takes home after all deductions, including taxes, benefits, garnishments, and other deductions, have been subtracted from their gross pay.

Question 2

Bill James earned $800 for the week. If his cumulative earnings are $40,000 prior to this pay period, how much FICA-OASDI must his employer withhold from his earnings? FICA tax rates are OASDI 6.2% on a limit of $128,400. (Round your answer to the nearest whole dollar.)

Accepted Answer

The OASDI tax is 6.2% of earnings up to $128,400. Bill's cumulative earnings after this week are $40,800, which is below the limit. Therefore, the tax is 6.2% of $800, which is $49.60, rounded to $50.

Question 3

Dave Brown's cumulative earnings are $104,000, and his gross pay for the week is $5,300. If the FICA rates are: OASDI 6.2% on a limit of $128,400 and Medicare is 1.45%, what are his FICA-OASDI and FICA-Medicare taxes for the week? (Round your answers to the nearest whole dollar.)

Accepted Answer

Dave Brown's cumulative earnings before this week are $104,000. Adding his gross pay for the week ($5,300) brings his total earnings to $109,300, which is below the OASDI limit of $128,400. Therefore, his OASDI tax is 6.2% of $5,300, which equals $328.60 (rounded to $329). His Medicare tax is 1.45% of $5,300, which equals $76.85 (rounded to $77).

Question 4

There are two parts to FICA:

Accepted Answer

FICA stands for Federal Insurance Contributions Act, and it includes two parts: OASDI (Old Age, Survivors, and Disability Insurance) and Medicare. These are contributions for retirement benefits and healthcare for the elderly, respectively.

Question 5

Under the Fair Labor Standards Act, for any hours that an employee works over 40 during a work week:

Accepted Answer

Under the Fair Labor Standards Act (FLSA), employees are entitled to receive overtime pay at a rate of one and a half times their regular rate of pay for any hours worked over 40 in a workweek.

Question 6

The Federal Insurance Contributions Act is better known as:

Accepted Answer

The Federal Insurance Contributions Act is commonly known as FICA, which is a payroll tax in the United States that funds Social Security and Medicare programs.

Question 7

The Fair Labor Standards Act must be followed if:

Accepted Answer

The Fair Labor Standards Act (FLSA) applies to companies engaged in interstate commerce, regardless of their size, which is why option C is correct. The FLSA's applicability isn't determined by the number of employees a company has, making options A and D incorrect. Regular earnings of employees, as mentioned in option B, also do not determine FLSA applicability.

Question 8

FICA taxes provide funding to the government to pay:

Accepted Answer

FICA taxes fund Social Security and Medicare programs, which include retirement benefits for those over 62, medical benefits for those over 65, and disability benefits.

Question 9

Dave Brown's cumulative earnings are $90,000, and his gross pay for the week is $6,700. If the FICA rates are: OASDI 6.2% on a limit of $128,400 and Medicare is 1.45%, what are his FICA-OASDI and FICA-Medicare taxes for the week? (Round your answers to the nearest whole dollar.)

Accepted Answer

Dave Brown's cumulative earnings before this week are $90,000. Adding his gross pay for the week ($6,700) brings his total earnings to $96,700, which is below the OASDI limit of $128,400. Therefore, his OASDI tax is 6.2% of $6,700, which equals $415.50, rounded to the nearest whole dollar is $415. His Medicare tax is 1.45% of $6,700, which equals $97.15, rounded to the nearest whole dollar is $97.

Question 10

The law that governs overtime earnings is called:

Accepted Answer

The Fair Labor Standards Act (FLSA) is the primary federal law governing overtime earnings, and it is sometimes referred to as the Federal Wage and Hour Law.

Question 11

Payroll taxes include all of the following except:

Accepted Answer

Federal income tax, state income tax, and FICA-OASDI (Social Security and Medicare) are all considered payroll taxes, meaning none of the options listed are exceptions.

Question 12

If Robert worked 38 hours, how many hours of overtime will Robert earn?

Accepted Answer

Overtime is typically counted after 40 hours of work per week. Since Robert worked 38 hours, which is less than 40, he would not earn any overtime hours.

Question 13

A company can deem an employee as salaried:

Accepted Answer

An employee can be classified as salaried if they meet specific criteria outlined in the Fair Labor Standards Act (FLSA), which includes earning a minimum salary threshold and performing certain types of job duties that are exempt from overtime.

Question 14

Gross Earnings are the same as:

Accepted Answer

Gross earnings are the total amount earned by an employee before any deductions, which includes both regular earnings and overtime earnings.

Question 15

Jim Barnes' cumulative earnings are $103,000, and his gross pay for the week is $6,400. If the FICA rates are: OASDI 6.2% on a limit of $128,400 and Medicare is 1.45%, what are his FICA-OASDI and FICA-Medicare taxes for the week? (Round your answers to the nearest whole dollar.)

Accepted Answer

Jim Barnes' cumulative earnings before this week are $103,000. Adding his gross pay for the week ($6,400) brings his total earnings to $109,400, which is below the OASDI limit of $128,400. Therefore, his FICA-OASDI tax is 6.2% of $6,400, which equals $396.80, rounded to $397. His FICA-Medicare tax is 1.45% of $6,400, which equals $92.80, rounded to $93.

Question 16

To compute federal income tax to be withheld:

Accepted Answer

To compute federal income tax to be withheld, gross earnings, number of allowances, and marital status are used. This information typically comes from an employee's Form W-4 and their pay information. Net earnings and deductions for overtime are not directly used for calculating federal income tax withholding.

Question 17

A pay period is defined as:

Accepted Answer

A pay period can be defined as any length of time for which an employee's wages are calculated, including weekly, biweekly, and monthly intervals. Different organizations may choose different pay periods based on their operational needs and local laws.

Question 18

Compute employee FICA taxes for the year on earnings of $114,000 at 6.2% on a limit of $128,400 for OASDI and 1.45% for Medicare. (Round your answer to the nearest whole dollar.)

Accepted Answer

The answer of Compute employee FICA taxes for the year...

Question 19

The number of allowances claimed by an employee determines how much will be withheld from their paycheck for:

Accepted Answer

The number of allowances claimed by an employee affects the amount withheld for federal income tax, not FICA-OASDI or FICA-Medicare, which are based on fixed percentages of income.

Question 20

Jim Stein's hourly wage is $40.00, and he worked 42 hours during the week. Assuming an overtime rate of time and a half over 40 hours, Jim's gross pay is: (Round your answer to the nearest whole dollar.)

Accepted Answer

Jim worked 42 hours, which is 2 hours overtime. His overtime pay is 2 hours x $40.00 x 1.5 = $120.00. His regular pay is 40 hours x $40.00 = $1,600.00. His gross pay is $1,600.00 + $120.00 = $1,720.00.

Quiz 7: Calculating Pay and Payroll Taxes: the Beginning of the Payroll Process