Accounting Chapter 12
Payroll Register
A business form used to record payroll information
Employee Earnings Record
A business used to record details affecting payments made to an employee
Withholding Allowance
A deduction from total earnings for each person legally supported by a taxpayer, including the employee
Medicare Tax
A federal tax paid for hospital insurance
Social Security Tax
A federal tax paid for old-age, survivors,and disability insurance
How is net pay calculated?
By subtracting total deductions from total earnings.
A separate payroll checking account is used primarily to
Provide additional protection and control payroll payments
Tax Base
The maximum amount of earnings on which a tax is calculated
salary
The money paid for employee services
What does the payroll register summarize?
The payroll register summarizes the payroll for one pay period and shows total earnings, payroll withholding's and net pay of all employees.
pay period
The period covered by a salary payment
payroll
The total amount earned by all employees for a pay period
What is a payroll?
The total amount earned by all employees for a pay period.
Net Pay
The total earnings paid to an employee after payroll taxes and other deductions
Total earning
The total pay due for a pay period before
Payroll Taxes
Taxes based on the payroll of a business
Total earnings are sometimes referred to as net pay or net earnings
false
Employee total earnings are calculated as regular hours x regular rate, plus overtime hours x overtime rate
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 count income taxes from employee earnings
true
Payroll taxes withheld represent a liability for an employer until payment is made to the government
true
Payroll time cards can be used as the basic source of information to prepare a payroll
true
The columns of the employee earning 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
How many hours were worked by a Hobby Shack employee who arrived at 8:29 and departed at 12:02?
3/4hours
How many hours were worked by an employee who arrived at 8:10 a.m. and departed at 12:10 p.m. ?
4 hours
What are the total earnings of a Hobby Shack employee who worked 44 hours in a week and earns $11.00 per hour?
$484
How many hours were worked by an employee who arrived at 7:05 a.m. and departed at 6:05 p.m.?
11 hours
Why do companies complete employee earnings records?
Because a business must send a quarterly report to federal and state governments showing employee taxable earnings and taxes withheld from employee earnings.
Does the employer or employee pay social security tax and Medicare tax?
Both
Employee federal income tax with-holdings are based on what two factors?
Employee marital status and number of withholding allowances
Where does an employer get the information used to determine the amount of federal income tax to withhold from employees' earnings?
Form W-4 Employee's Withholding Allowance Certificate
How do payroll procedures differ for employees who request that their pay be deposited through electronic funds transfer?
Individual checks are not written and do not have to be distributed.
How does Hobby Shack calculate overtime earnings?
Overtime hours X the overtime rate
Why does Hobby Shack have a separate checking account for payroll checks?
To help protect and control payroll payments
The larger the number of withholding allowances claimed, the larger the amount of income tax withheld
false
A new earnings record is prepared for each employee each year
false
Social security tax is payed by the employer only
false
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.
false
The first task in preparing a payroll is to determine the number of days worked by each employee
false
Employee regular earnings are calculated as...
regular hours times regular rates
What is the source of the information that is recorded on each employee's payroll check stub?
the payroll register
Social security tax is calculated on...
total earnings and number of withholding allowances
A business is required by law to withhold federal income taxes from employee total earnings
true
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
A single person will have less income tax withheld than a married employee
true
All deductions from employee wages are recorded in a payroll register
true
An act of Congress can change the social security base and tax rate at any time
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