Accounting Chapter 12

A new earnings record is prepared for each employee each year.

False

A single person will have less income tax withheld than a married employee.

False

A business is required by law to withhold certain payroll taxes from employee salaries.

True

An employee can be exempt from having federal income tax withheld under certain conditions.

True

Businesses use payroll records to inform employees of their annual earnings and to prepare payroll reports for the government.

True

Employee total earnings are calculated as regular hours x regular rate, plus overtime hours x overtime rate.

True

Payroll taxes withheld represent a liability for an employer until payment is made to the government.

True

Payroll taxes withheld represent a liability for an employer until payment is made.

True

Payroll time cards can be used as the basic source of information to prepare a payroll.

True

The money paid for employee services

salary

The maximum amount of earnings on which a tax is calculated

tax base

The total pay due for a pay period before deductions

total earnings

A deduction from total earnings for each person legally supported by a taxpayer, including the emplyee

withholding allowance

Social security tax is paid by the employer only.

False

The first task in preparing a payroll is to determine the number of days worked by each employee.

False

The larger the number of withholding allowances claimed, the larger the amount of income tax withheld.

False

Total earnings are sometimes referred to as net pay or net earnings.

False

A federal tax paid for hospital insurance

Medicare tax

A business may decide to pay employee salaries every week, every two weeks, twice a month, or once a month.

True

A check for the total net pay is written and deposited in the payroll checking account.

True

All deductions from employee wages are recorded in a payroll register.

True

An act of Congress can change the social security tax base and tax rate at any time.

True

Employers are required to have a current Form W-4, Employee's Withholding Allowance Certificate, for all employees.

True

Employers in many states are required to withhold state, city, or county income tax from employee earnings.

True

The amount of income tax withheld from each employee's total earnings is determined from the number of withholding allowances and by the employee's marital status.

True

The columns of the employee earnings record consist of the amount columns in a payroll register and an accumulated earnings column.

True

The information used to prepare payroll checks is taken from a payroll register.

True

When EFT is used, the employee does not receive an individual check.

True

When an employee's earnings exceed the tax base, no more social security tax is deducted.

True

The amount on the employee earnings record used to determine if certain payroll taxes apply to an employee's earnings is _____. a. accumulated earnings b. social security taxes c. net pay d. gross earnings

a. accumulated earnings

How many hours were worked by an employee who arrived at 8:10 a.m. and departed at 12:10 p.m.? a. 5 hours b. 4 hours c. 4 hours and 10 minutes d. none of these

b. 4 hours

A separate payroll checking account is used primarily to _____. a. simplify the payroll accounting system b. provide additional protection and control payroll payments c. help reduce the cost of preparing a payroll d. eliminate employer earnings records

b. provide additional protection and control payroll payments

Employee regular earnings are calculated as _____. a. overtime hours minus overtime rate b. regular hours times regular rate c. total hours divided by regular rate d. total hours plus overtime rate

b. regular hours times regular rate

How many hours were worked by an employee who arrived at 7:05 a.m. and departed at 6:05 p.m. with one hour off for lunch? a. 12 hours b. 11 hours c. 10 hours d. none of these

c. 10 hours

The total earnings paid to an employee after payroll taxes and other deductions is recorded in the payroll register's _____. a. Total Earnings column b. Gross Pay column c. Net Pay column d. Total Deductions column

c. Net Pay column

A business form used to record details affecting payments made to an employee is _____. a. a tax withholding form b. an employee accounts payable record c. an employee earnings record d. a payroll journal

c. an employee earnings record

Social security tax is calculated on _____. a. total earnings and marital status b. number of withholding allowances c. employee earnings up to a maximum paid in a calendar year d. total earnings and number of withholding allowances

c. employee earnings up to a maximum paid in a calendar year

The withholding allowances of an employee affect _____. a. social security tax withheld b. state unemployment tax owed c. federal income tax withheld d. federal unemployment tax owed

c. federal income tax withheld

Individual payroll checks are usually written on _____. a. a company's regular checking account b. a special purposes account c. an employee earnings account d. a special payroll checking account

d. a special payroll checking account

Each employee name is listed in a payroll register along with _____. a. withholding allowances b. employee number c. marital status d. all of these

d. all of these

Federal income tax is withheld from employee earnings _____. a. only in states where a state income tax is levied b. only in those states electing to do so c. in all states with over 10,000,000 population d. in all 50 states

d. in all 50 states

The Accumulated Earnings column of the employee earnings recorded _____. a. is the gross earnings for one quarter b. shows net pay for the year c. shows net pay for one quarter d. is the total earnings since the first of the year

d. is the total earnings since the first of the year

Employee regular earnings are calculated as _____. a. total hours divided by regular rate b. total hours plus overtime rate c. overtime hours minus overtime rate d. regular hours times regular rate

d. regular hours times regular rate

A business form used to record details affecting payments made to an employee

employee earnings record

The total earnings paid to an employee after payroll taxes and other deductions

net pay

The period covered by a salary payment

pay period

The total amount earned by all employees for a pay period

payroll

A business form used to record payroll information

payroll register

Taxes based on the payroll of a business

payroll taxes

A federal tax paid for old-age, survivors, and disability insurance

social security tax