Accounting 2 Chapter 12 true/false

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

False

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

True

The investment income of a 401(k) account is taxable to the employee in the year earned.

false

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

false

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

true

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

true

Contributions to a Roth IRA do not provide a current tax benefit.

true

Employee contributions to a 401(k) reduce the amount of earnings subject to payroll taxes.

true

Federal income tax is one example of a payroll deduction.

true

Qualified retirement plans are approved by the Internal Revenue Service.

true

Taxes on the contributions and investment income of an IRA are deferred until the funds are withdrawn.

true

The amount of income tax withheld from each employee's total earnings is determined by 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 original voucher check, with the voucher attached, is mailed to the vendor.

true

The voucher of a payroll check contains current pay period and year-to-date earnings and deduction information.

true

Today's time clocks can feed data directly into a company's computer system.

true

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

true

When electronic funds transfer (EFT) is used, the employee does not receive an individual check.

true

A check for each employee's total net pay is written on the general checking account of the business.

false

Social security tax is only paid by the employer.

false

The investment income in a Roth IRA is subject to federal income taxes when withdrawn.

false

A single person will have less income tax withheld than a married employee earning the same amount.

False

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

True

An hourly employee's total earnings are calculated as (Regular Hours × Regular Rate) + (Overtime Hours × Overtime Rate).

True

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

True