Question 1

Tom's gross pay for this month is $8,150.His gross pay year-to-date,prior to this month totaled $101,000.Tom's rate for federal income tax is 24%.His voluntary deductions total $900.What is the amount of Tom's net pay?

Accepted Answer

A) Calculations: $8,150 - $477.78 - ($8,150 × 24%) - $900 = $4,816.22

Question 2

Sue works 46 hours at her job during the week.She is paid $13.30/hour and receives overtime at the rate of time-and-one-half for hours worked over forty.Sue is taxed for federal income taxes at 15% and 7.65% for OASDI and Medicare.All of her income is taxable.What is Sue's net pay?

Accepted Answer

C) Calculation: $651.70 - ($651.70 × 15%) - ($651.70 × 7.65%) = $504.89

Question 3

Tom's gross pay for the week is $800.Tom's yearly pay is under the limit for OASDI.Assume that the rate for state and federal unemployment compensation taxes is 6.2%,and that Tom's pay year-to-date has previously exceeded the $7,000 cap.How much is the amount of state and federal unemployment tax that Tom's employer must record as payroll tax expense and pay to the federal and state governments?

Accepted Answer

A) Calculations: 0 only

Question 4

Which of the following are deducted to arrive at an employee's net pay?

Accepted Answer

Federal income taxes are deducted from an employee's gross pay to arrive at their net pay. FICA taxes-employer's portion, federal unemployment taxes, and state unemployment taxes are employer responsibilities and do not directly reduce an employee's gross pay.

Question 5

Which of the following is pay stated as a percentage of a sale amount?

Accepted Answer

Commissions are a percentage of a sale amount and are typically awarded to salespeople or other employees who generate revenue for the company. Bonuses may be tied to sales performance, but they are not necessarily a percentage of a sale amount. Benefits and wages are typically fixed amounts, not based on a percentage of sales.

Question 6

Which of the following are NOT required to be deducted from employees' paychecks?

Accepted Answer

Charitable contributions are voluntary and should not be deducted from employees' paychecks without their explicit consent. The other options (federal income tax, FICA, and state income tax) are mandatory deductions required by law.

Question 7

Mary's gross pay for the week is $1,000.Mary's deduction for federal income tax is based on a rate of 20%.Mary has voluntary deductions of $150.Her yearly pay is under the limit for OASDI.What is the amount of FICA deducted from her pay?

Accepted Answer

B) Calculations: $1,000 × .0765 = $76.50

Question 8

Tom's gross pay for the week is $800.Tom's deduction for federal income tax is based on a rate of 18%.Tom has no voluntary deductions.Tom's yearly pay is under the limit for OASDI.How much is the amount of FICA tax that Tom's employer must record as payroll tax expense and pay to Social Security?

Accepted Answer

B) Calculations: $800 × 7.65% = $61.20

Question 9

Tom's gross pay for the week is $800.Tom's deduction for federal income tax is based on a rate of 18%.Tom has no voluntary deductions.Tom's yearly pay is under the limit for OASDI.What is the amount of Tom's net pay?

Accepted Answer

A) Calculations: $800.00 - ($800 × .0765) - ($800 × .18) = $594.80

Question 10

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 and are usually paid for exceptional performance or meeting specific goals. Commissions are also pay over and above base salary, but they are based on sales or revenue generated rather than performance or meeting goals. Benefits are non-wage compensations such as health insurance, retirement plans, etc. Wages are the hourly or weekly payments for work performed.

Question 11

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

Accepted Answer

The Federal Insurance Contributions Act (FICA) tax, which funds Social Security and Medicare, has a wage ceiling above which no tax is levied. As of 2021, the taxable wage base is $142,800. Therefore, earnings above this limit do not contribute to Social Security or Medicare taxes. The other taxes listed do not have such a ceiling on earnings subject to tax.

Question 12

Mary's gross pay for the week is $1,000.Mary's deduction for federal income tax is based on a rate of 20%.Mary has voluntary deductions of $150.Her yearly pay is under the limit for OASDI.What is the amount of her net pay?

Accepted Answer

D) Calculations: $1,000.00 - ($1,000 × .0765) - ($1,000 × .20) - $150 = $573.50

Question 13

Tom's gross pay for this month is $8,150.His gross pay year-to-date,prior to this month totaled $101,000.What is the amount of FICA withheld from Tom's pay for this month?

Accepted Answer

C) Calculations: $106,800 - $101,000 = $5,800
($5,800 × 6.20%) + ($8,150 × 1.45 %) = $477.78

Question 14

Tom's gross pay for the week is $800.Tom's yearly pay is under the limit for OASDI.Assume that the rate for state and federal unemployment compensation taxes is 6.2%,and that Tom's pay year-to-date has not yet exceeded the $7,000 cap.How much is the total amount of payroll taxes that Tom's employer must record as payroll tax expenses?

Accepted Answer

C) Calculations: ($800 × 7.65%) + ($800 × 6.2%) = $110.80

Question 15

Which of the following deductions must be matched by the employer,resulting in both a deduction from gross pay and an expense to the employer?

Accepted Answer

FICA taxes (Social Security and Medicare taxes) are the only deductions that must be matched by the employer, resulting in both a deduction from gross pay and an expense to the employer. Federal income taxes and charitable deductions reduce an employee's taxable income but do not require matching by the employer. Federal unemployment taxes are solely paid by the employer.

Question 16

Which of the following is NOT an expense of the employer?

Accepted Answer

Employee income taxes are the responsibility of the employee, not the employer. The other choices are all expenses that the employer is required to pay.

Question 17

Which of the following are pay amounts stated at an hourly rate?

Accepted Answer

Wages are pay amounts stated at an hourly rate.

Option A (Bonuses) and B (Commissions) are pay amounts that are not stated at an hourly rate. 
Option D (Benefits) is a non-monetary compensation package and does not have an hourly rate associated with it.

Question 18

Which of the following taxes does NOT have a limit on the amount of tax paid per individual?

Accepted Answer

Federal income taxes do not have a limit on the amount of tax paid per individual, as they are based on the taxable income of the individual, which can vary widely without a cap. FICA taxes, federal unemployment taxes, and state unemployment taxes all have caps on the amount of income subject to taxation.

Question 19

Tom's gross pay for the week is $800.Tom's deduction for federal income tax is based on a rate of 18%.Tom has no voluntary deductions.Tom's yearly pay is under the limit for OASDI.What is the amount of FICA withheld from Tom's pay?

Accepted Answer

B) Calculations: $800 × .0765 = $61.20

Question 20

Tom's gross pay for the week is $800.Tom's yearly pay is under the limit for OASDI.Assume that the rate for state and federal unemployment compensation taxes is 6.2%,and that Tom's pay year-to-date has not yet exceeded the $7,000 cap.How much is the amount of state and federal unemployment tax that Tom's employer must record as payroll tax expense and pay to the federal and state governments?

Accepted Answer

D) Calculations: $800 × 6.2% = $49.60

Quiz 10: Current Liabilities and Payroll