payroll tax chapter 6

1. An employee's marital status and number of withholding allowances never appear on the payroll register. a. True b. False

ANSWER: False

10. The wage and salaries expense account is an operating expense account debited for total net pay each payroll period. a. True b. False

ANSWER: False

11. FIT Payable is a liability account used to record employees' withheld federal income tax and also the employer's match of that tax. a. True b. False

ANSWER: False

15. Under the provisions of the Consumer Credit Protection Act, an employer can discharge an employee simply because the employee's wage is subject to garnishment for a single indebtedness. a. True b. False

ANSWER: False

9. Tax withholdings from employees' pays reduce the amount of the debit to Salary Expense in the payroll entry. a. True b. False

ANSWER: False

26. The entry to record the employer's payroll taxes usually includes credits to the liability accounts for FICA (OASDI and HI), FUTA, and SUTA taxes. a. True b. False

ANSWER: True

30. The FUTA tax part of the payroll tax entry is recorded at the net amount (0.6%) of the taxable payroll. a. True b. False

ANSWER: True

31. Since FUTA tax is paid only once a quarter, the FUTA tax expense is recorded only at the time of payment. a. True b. False

ANSWER: False

19. The total of the net amount paid to employees each payday is credited to either the cash account or the salaries payable account. a. True b. False

ANSWER: True

4. In order to prepare Forms W-2, an employer would utilize the employee's earnings record. a. True b. False

ANSWER: True

33. Since the FUTA tax is a social security tax, it can be charged to the same expense account as the other payroll taxes on the employer, the payroll taxes account. a. True b. False

ANSWER: True

35. When the federal tax deposit is made, the employees' and employer's shares of FICA taxes are paid along with the employees' FIT taxes withheld. a. True b. False

ANSWER: True

39. Union Dues Payable is a liability account credited with the deductions made from union members' wages for their union dues. a. True b. False

ANSWER: True

5. Once the journal entry for the payroll is complete, the information is posted to the appropriate general ledger accounts. a. True b. False

ANSWER: True

48. The entry made at the end of the accounting period to record wages incurred but unpaid is: a. Wages Expense Wages Payable b. Wages Expense FICA Taxes Payable—OASDI FICA Taxes Payable—HI FIT Payable Wages Payable c. Wages Payable Cash d. Wages Expense Cash e. Wages Expense Payroll Taxes Wages Payroll

ANSWER: a

41. Carmen Gaetano worked 46 hours during this payweek. He is paid time-and-a-half for hours over 40 and his pay rate is $17.90/hour. What was his overtime premium pay for this workweek? a. $107.40 b. $161.10 c. $50.70 d. $53.70 e. $26.85

ANSWER: d

47. When recording the deposit of FUTA taxes owed, the proper entry is: a. FUTA Tax Expense Cash b. Payroll Taxes Cash c. Payroll Taxes FUTA Taxes Payable d. FUTA Taxes Payable Cash e. FUTA Tax Expense FUTA Taxes Payable

ANSWER: d

50. In recording the monthly adjusting entry for accrued wages at the end of the accounting period, the amount of the adjustment would usually be determined by: a. collecting the timesheets for the days accrued. b. using the same amount as the prior month's adjustment. c. using the wages of the salaried workers only. d. a percentage of the previous week's gross payroll. e. a percentage of the previous week's net payroll.

ANSWER: d

44. The garnishment that takes priority over all others is : a. a federal tax levy b. a government student loan c. a creditor garnishment d. an administrative wage garnishment e. a child support order

ANSWER: e

46. Which of the following is not an expense of the employer? a. FUTA tax b. FICA tax—HI c. FICA tax—OASDI d. SUTA tax e. Union dues withheld

ANSWER: e

27. The employer's payroll tax expenses are recorded by all employers at the time these taxes are actually paid. a. True b. False

ANSWER: False

28. FICA Taxes Payable—OASDI is a liability account debited for the employer's portion of the FICA tax. a. True b. False

ANSWER: False

36. In the adjusting entry to accrue wages at the end of the accounting period, there is no need to credit any tax withholding accounts. a. True b. False

ANSWER: True

49. Which of the following items would require an adjusting entry at the end of each accounting period? a. Garnishment for child support payments b. Withholdings for a 401(k) plan c. Vacation pay earned by employees d. Union dues withheld e. None of the above

ANSWER: c

29. Since the credit against the FUTA tax (for SUTA contributions) is made on Form 940, the employer's payroll tax entries should include the FUTA tax at the gross amount (6.0%). a. True b. False

ANSWER: False

3. An employer will use the payroll register to keep track of an employee's accumulated wages. a. True b. False

ANSWER: False

32. At the time that the entry is made to record the employer's payroll taxes, the SUTA tax is recorded at the net amount (0.6%). a. True b. False

ANSWER: False

34. If employees must contribute to the state unemployment fund, this deduction should be shown in the payroll tax entry. a. True b. False

ANSWER: False

6. Deductions from gross pay in the payroll register are reflected on the credit side of the journal entry to record the payroll. a. True b. False

ANSWER: True

42. The employee's earnings record provides information for each of the following except: a. completing Forms W-2. b. completing the journal entry to record the payroll. c. determining when the accumulated wages of an employee reach cutoff levels. d. preparing reports required by state unemployment compensation laws. e. preparing the payroll register.

ANSWER: b

45. Which of the following accounts is an expense account in which an employer records the FICA, FUTA, and SUTA taxes? a. Wages Expense b. Payroll Taxes c. SUTA Taxes Payable d. Salaries Payable e. None of the above

ANSWER: b

43. Which of these accounts shows the total gross earnings that the employer incurs as an expense each payday? a. Payroll Taxes b. Federal Income Taxes Payable c. Wages Expense d. Salaries Payable e. None of the above

ANSWER: c

16. Under the Consumer Credit Protection Act, disposable earnings are the earnings remaining after any deductions for health insurance. a. True b. False

ANSWER: False

18. Service charges that are passed on to the employee by the employer are not part of the disposable earnings subject to garnishment. a. True b. False

ANSWER: False

2. Companies usually provide a separate column in the payroll register to record the employer's payroll taxes. a. True b. False

ANSWER: False

20. Every state allows employers to make e-payment options as a condition of employment. a. True b. False

ANSWER: False

21. Under the Uniform Unclaimed Property Act, any unclaimed paychecks must be turned over to the state after the next payday. a. True b. False

ANSWER: False

22. FUTA Taxes Payable is an expense account in which are recorded the employer's federal unemployment taxes. a. True b. False

ANSWER: False

37. The adjusting entry to record the accrued vacation pay at the end of an accounting period includes credits to the tax withholding liability accounts. a. True b. False

ANSWER: False

38. Since vacation time is paid when used, there is no need to accrue this time in a liability account at the end of each accounting period. a. True b. False

ANSWER: False

40. Posting to the general ledger for payroll entries is done only at the end of each calendar year. a. True b. False

ANSWER: False

7. If wages are paid weekly, postings to the employee's earnings record would be done once a month. a. True b. False

ANSWER: False

8. Each payday, the total of net pays that the employer incurs is the wage expense that must be debited. a. True b. False

ANSWER: False

12. A debit to the employees FIT payable account removes the liability for the amount of federal income taxes withheld from employees' wages. a. True b. False

ANSWER: True

13. Amounts withheld from employees' wages for health insurance are credited to a liability account. a. True b. False

ANSWER: True

14. When withheld union dues are turned over to the union by the employer, a journal entry is made debiting the liability account and crediting the cash account. a. True b. False

ANSWER: True

17. Tips received by employees are not included as disposable earnings subject to garnishment a. True b. False

ANSWER: True

23. The payroll taxes incurred by an employer are FICA, FUTA, and SUTA. a. True b. False

ANSWER: True

24. The payroll taxes account is an expense account that is debited for the FICA, FUTA, and SUTA taxes on the employer. a. True b. False

ANSWER: True

25. The FICA taxes on the employer represent both business expenses and liabilities of the employer. a. True b. False

ANSWER: True