Question 1

Art Parrish, the sole employee of Parrish Sales, has gross salary for March of $4,000. The entire amount is under the OASDI limit of $106,800, and thus subject to FICA. He is also subject to federal income tax at a rate of 18%. Please provide the second entry in the payroll cycle to record the disbursement of his net pay.

Accepted Answer

The answer of Art Parrish, the sole employee of Parrish...

Question 2

Which of the following is an important aspect of control over payroll?

Accepted Answer

Controls for efficiency in payroll procedures are important to ensure accurate and timely payment to employees, as well as to prevent errors or fraud. The other options listed are not directly related to control over payroll.

Question 3

Art Parrish is the sole employee of Parrish Sales. His company pays a portion of his health insurance premium, and also contributes to a retirement plan in his name. The company share of the health insurance premium is $400, and the company contribution to the retirement plan is $550. Please provide the third journal entry in the payroll cycle to record the employee benefits paid by the company.

Accepted Answer

The answer of Art Parrish is the sole employee of...

Question 4

Which of the following is an important internal control over payroll?

Accepted Answer

Separating the duties of the disbursement of paychecks from the recording of payroll transactions in the ledger is an important internal control over payroll as it ensures that the same person is not able to both process and record payroll transactions, reducing the risk of errors or fraudulent activity. Option B is related to the internal control over fixed assets, Option C is related to the internal control over accounts payable, and Option D is related to the internal control over cash disbursements.

Question 5

Art Parrish, the sole employee of Parrish Sales, has gross salary for March of $4,000. The entire amount is under the OASDI limit of $106,800, and thus subject to FICA. His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA. The fourth journal entry in the payroll cycle to record the employer's payroll taxes should include which of the following?

Accepted Answer

DThe correct entries to record the employer's payroll taxes would include a debit to Payroll Tax Expense (A) for the amount of the employer's share of FICA taxes, and a credit to Cash (D) for the payment of those taxes. The employer's payroll taxes are an expense to the employer and are paid out in cash, hence the debit to an expense account and the credit to Cash.

Question 6

Which of the following is a control procedure to prevent fictitious persons cashing paychecks?

Accepted Answer

Requiring photo IDs for employees picking up their paychecks is the best control procedure to prevent fictitious persons cashing paychecks as it ensures that only the person named on the paycheck receives it. The other options do not address the issue of preventing fictitious persons from cashing paychecks. Clocking in and out of work only tracks employees' time worked, computerized records of payroll data only provides accurate information about employees' pay, and serial numbering of paychecks only helps to track which checks have been issued and cashed but does not prevent fictitious persons from cashing them.

Question 7

Art Parrish is the sole employee of Parrish Sales. His company pays a portion of his health insurance premium, and also contributes to a retirement plan in his name. The company share of the health insurance premium is $400, and the company contribution to the retirement plan is $550. The third journal entry in the payroll cycle to record the employee benefits to be paid by the company should include a credit to Cash for $950.

Accepted Answer

The third journal entry in the payroll cycle should debit Employee Benefits Expense for $950, and credit Health Insurance Payable for $400 and Retirement Plan Payable for $550. There should not be a credit to Cash at this point in the payroll cycle.

Question 8

Which of the following is a reason that many companies maintain two payroll bank accounts?

Accepted Answer

The answer of Which of the following is a reason...

Question 9

Which of the following is a reason that many companies require a photo ID when employees pick up their paychecks?

Accepted Answer

Requiring a photo ID when employees pick up their paychecks helps companies avoid writing a paycheck to a fictitious person, which could happen if someone else were to impersonate the employee.

Question 10

Good internal controls over payroll would include all of the following EXCEPT that:

Accepted Answer

Cash receipts from customers and accounting for accounts receivable are not directly related to the internal controls over payroll. The other options all relate to separating duties and ensuring accuracy in the payroll process.

Question 11

Art Parrish, the sole employee of Parrish Sales, has gross salary for March of $4,000. The entire amount is under the OASDI limit of $106,800, and thus subject to FICA. He is also subject to federal income tax at a rate of 18%. His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA. The fifth journal entry in the payroll cycle to record the payment by the company of payroll taxes to the government includes which of the following?

Accepted Answer

The answer of Art Parrish, the sole employee of Parrish...

Question 12

Art Parrish, the sole employee of Parrish Sales, has gross salary for March of $4,000. The entire amount is under the OASDI limit of $106,800, and thus subject to FICA. He is also subject to federal income tax at a rate of 18%. His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA. The fifth journal entry in the payroll cycle to record the payment by the company of payroll taxes to the government includes which of the following?

Accepted Answer

The payment of FICA taxes is recorded with a debit to FICA tax payable. The other options are not relevant to the payment of payroll taxes to the government.

Question 13

The Statewide Sales Company has gross pay for March of $45,000. Please provide the first journal entry in the payroll cycle to record salary expense.

Accepted Answer

The answer of The Statewide Sales Company has gross pay...

Question 14

Art Parrish, the sole employee of Parrish Sales, has gross salary for March of $4,000. The entire amount is under the OASDI limit of $106,800, and thus subject to FICA. His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA. Please provide the fourth journal entry in the payroll cycle to record the employer's payroll taxes.

Accepted Answer

The answer of Art Parrish, the sole employee of Parrish...

Question 15

Which of the following is a major control risk in the payroll area?

Accepted Answer

Fictitious persons cashing paychecks is a major risk in the payroll area. This can occur when employees create fake names and collect the paychecks, leading to a loss of funds for the company. It is important for companies to have strong controls in place to prevent this type of fraud.

Question 16

Art Parrish is the sole employee of Parrish Sales. His company pays a portion of his health insurance premium, and also contributes to a retirement plan in his name. The company share of the health insurance premium is $400, and the company contribution to the retirement plan is $550. The third journal entry in the payroll cycle to record the employee benefits to be paid by the company should include which of the following?

Accepted Answer

The answer of Art Parrish is the sole employee of...

Question 17

Art Parrish, the sole employee of Parrish Sales, has gross salary for March of $4,000. The entire amount is under the OASDI limit of $106,800, and thus subject to FICA. He is also subject to federal income tax at a rate of 18%. Art has a deduction of $320 for health insurance and $80 for United Way. Please provide the second entry in the payroll cycle to record the disbursement of his net pay.

Accepted Answer

The answer of Art Parrish, the sole employee of Parrish...

Question 18

Art Parrish, the sole employee of Parrish Sales, has gross salary for March of $4,000. The entire amount is under the OASDI limit of $106,800, and thus subject to FICA. His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA. The fourth journal entry in the payroll cycle to record the employer's payroll taxes should include which of the following?

Accepted Answer

The employer's portion of FICA taxes includes both Social Security and Medicare. As Art Parrish's salary is under the Social Security limit, his entire salary is subject to FICA taxes. Therefore, to record the employer's portion of FICA taxes, a credit should be made to FICA tax payable. This will increase the liability on the balance sheet until the taxes are paid. Options A and D are incorrect because they do not account for the specific tax being recorded, and option B is incorrect because it only represents a portion of the employer's payroll taxes.

Question 19

Art Parrish, the sole employee of Parrish Sales, has gross salary for March of $4,000. The entire amount is under the OASDI limit of $106,800, and thus subject to FICA. He is also subject to federal income tax at a rate of 18%. His year-to-date pay has already exceeded the $7,000 cap for FUTA and SUTA. Please provide the fifth journal entry in the payroll cycle to record the payment by the company of payroll taxes to the government.

Accepted Answer

The answer of Art Parrish, the sole employee of Parrish...

Quiz 10: Current Liabilities and Payroll

Which of the following is an important aspect of control over payroll?

Which of the following is an important internal control over payroll?

Which of the following is a control procedure to prevent fictitious persons cashing paychecks?

Which of the following is a reason that many companies maintain two payroll bank accounts?

Which of the following is a reason that many companies require a photo ID when employees pick up their paychecks?

Good internal controls over payroll would include all of the following EXCEPT that:

The Statewide Sales Company has gross pay for March of $45,000. Please provide the first journal entry in the payroll cycle to record salary expense.

Which of the following is a major control risk in the payroll area?