Accounting Chapter 7

Gross Pay

the total amount of an employee's earnings before deductions are taken out

Social Security tax rate

6.2% for every $106,800

Wage-bracket tax tables

A chart providing the amounts to be deducted for income taxes based on amount of earnings, marital status, and number of allowances claimed.

Payroll register

A manual or computerized schedule prepared for each payroll period listing the earnings, deductions, and net pay for each employee.

Payroll bank account

A special checking account used to pay a company's employees

Employee Individual Earnings Record

A supplementary record for each employee showing personal payroll data and yearly cumulative earnings, deductions, and net pay

withholding allowance

An allowance claimed by an employee (on a W-4), which employers use to calculate the amount of income tax withheld from an employee's paycheck.

The Social Security Act of 1935 was originally enacted to provide

Benefits for retired workers

When is that payroll register update?

Each payday

Pre-tax deductions

Employee deductions that are not subject to income tax. The deductions include medical insurance premiums, medical and dependent care expenses under a flexible spending plan, and 401(k) contributions.

The 941 employer's tax payment to the IRS consists of

Employee's FIC Withheld Employer's matching FICA Employee's federal income tax withheld

The Medicare tax is 6.2% of unlimited gross earnings

False. 1.45% all earnings

Medicare taxes

Federal government taxes levied on employees and employers; proceeds are used for medical insurance for eligible people aged 65 and over

Social Security taxes

Federal government taxes levied on employees and employers; proceeds are used for old-age pensions and disability benefits.

Net Pay

Gross pay minus deductions. Also called take-home pay.

A plumber who sets his own work schedule is an example of?

Independent Contractor

Workers' Compensation Laws

Laws that protect employees and dependents against losses due to death or injury incurred on the job.

The Fair Labor Standards Act of 1938 provides for

Minimum standard wages and overtime Provisions for child labor and equal pay for equal work Exemptions for specified employees

Piece rate

Paid at the rate of so much per unit production

FUTA

Paid by the employer only and is based on the total earnings during the calendar year

A company with a large number of employee's would have what type of bank?

Payroll bank account

The source of information for the employee's individual earnings record is

Payroll register

What are the two parts of FICA taxes?

Social Security and Medicare

FICA taxes

Social Security taxes plus Medicare taxes, paid by both employee and employer under the provisions of the Fderal Insurance Contributions Act. The proceeds are used to pay old age and disability pensions and to fund the Medicare program.

Independent Contractor

Someone who is engaged for a definite job or service and who may choose his or her own means of doing the work. This person is not an employee of the firm for which the service is provided.

SUTA

Tax is paid by the employer and is filed on a quarterly basis (3 months) 5.4% for the first $7000

Fair Labor Standards Act

The act of 1938 that provides for minimum standards for wages and overtime, including provisions related to child labor and equal pay for equal work

Taxable Earnings

The amount of an employee's earnings subject to a tax.

Employee's may be paid hourly or salary based on?

Type of work performed Period of time covered

What is NOT used to calculate the federal income tax to be withheld by employers

W-2

The payroll register contains all of the following except

W-4

A law that protects employees and dependents against losses due to death or injury on the job is?

Worker Compensation Law

Types of compensation that an employee might receive include:

a bonus, meals, profit sharing, commission,

calender year

a twelve month period beginning Jan 1st and concluding on Dec 31st

Social Security Act of 1935

an act that provides for worker retirement funding through deductions from workers' wages and matching amounts from their employers

exemption

an amount of an employee's annual earnings not subject to income tax for the tax payer, tax payer's spouse and the dependents( usually children)

The total amount of employee compensation before deductions are taken out is referred as

gross pay

Net pay is equal to

gross pay minus all deductions

employee

one who works for compensation under the direction and control of the employer

To examine in detail the weekly payroll figures of all employees one would look at

payroll register

Current Tax Payment Act

(Income Tax Withholding) An act that requires employers to withhold and pay employee funds to the U.S. Treasury.

Sonia works 38 hours in a week. How many hours will Sonia get paid for?

0!!!!

A law that regulates overtime earnings is called?

Fair Labor Standards Act

A company with a small number of employees would probably use what type of account to issue a check for employee's?

Regular bank account

Employee's Withholding Allowance Certificate (Form W-4)

a form that specifies the number of allowances claimed by each employee and gives the employer the authority to withhold money for an employee's federal income tax