Ch 6 Payroll practice test

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18. 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

A) True

2. Once the journal entry for the payroll is complete, the information is posted to the appropriate general ledger accounts. A) True B) False

A) True

26. In the garnishment process, federal tax levies take secondary priority to wages withheld for child support orders. A) True B) False

A) True

27. The information needed in preparing a journal entry to record the wages earned, deductions from wages, and net amount paid each payday is obtained from the payroll register. A) True B) False

A) True

3. 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

A) True

5. Tips received by employees are included as disposable earnings subject to garnishment for child support. A) True B) False

A) True

7. The FICA taxes on the employer represent both business expenses and liabilities of the employer. A) True B) False

A) True

1. An employer will use the payroll register to keep track of an employee's accumulated wages. A) True B) False

B) False

10. 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

B) False

14. At the time that the entry is made to record the employers payroll taxes, the SUTA tax is recorded at the net amount (0.6%). A) True B) False

B) False

15. 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

B) False

28. In all computerized payroll systems, there is still the need to manually post from the printed payroll journal entry to the general ledger. A) True B) False

B) False

29. The payroll register is used by employers in completing Forms W-2. A) True B) False

B) False

6. FUTA Taxes Payable is an expense account in which are recorded the employer's federal unemployment taxes. A) True B) False

B) False

8. 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

B) False

9. If employees must contribute to the state unemployment fund, this deduction should be shown in the payroll tax entry. A) True B) False

B) False

15. 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

B) Payroll Taxes

12. 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.

B) completing the journal entry to record the payroll.

19. 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

C) Vacation pay earned by employees

13. 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

C) Wages Expense

11. Carmen Gaetano worked 46 hours during this pay week. 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

D) 53.70

17. 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

D) FUTA Taxes Payable- Cash

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

D. FUTA Taxes Payable Cash

Unclaimed employee wages are returned to the employer. True False

False Although states vary considerably on unclaimed wage reporting, employers are required to surrender the money as unclaimed property.

When union dues that have been withheld from employees' wages are turned over to the union treasurer, the account Union Dues Payable is debited. T F

T

Net pay" is sometimes known as "take-home" pay. True False

True

Which of the following is not an expense of the employer? FUTA tax FICA tax-HI FICA tax-OASDI SUTA tax Union dues withheld

Union dues withheld

The only portion of wages that are exempt from a federal tax levy is: a. wages for child support. b. the standard deduction of the taxpayer. c. state taxes. d. union dues

b. the standard deduction of the taxpayer.

The employers' OASDI portion of FICA taxes is included as part of the payroll tax entry, but the employers' HI portion of FICA taxes is not.. T F

F

The payment of the FUTA tax and the FICA taxes by the employer to the IRS is recorded in the same journal entry. T F

F

A Company who credits the cash account cannot pay their employees by check. They must pay the employees with actual dollars. True False

False

A distribution column in a payroll register separates payroll expenses into classifications such as FUTA, SUTA and net payroll. True False

False (A distribution column in the payroll register separates the various expenses into classifications such as Sales Expenses, Administrative Expenses, Factory Expenses, etc)

The Form 940 is the source document for all employee payroll journal entries. True False

False The Payroll Register is the source document for all employee payroll journal entries.

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

Payroll Taxes

The entry to deposit FICA taxes and federal income taxes withheld involves all of the following accounts except: Payroll Taxes. FICA Taxes Payable-OASDI. FICA Taxes Payable-HI. Employees FIT Payable. Cash

Payroll Taxes.

FICA Taxes Payable—HI is a liability account in which is recorded the liability of the employer for the HI tax on the employer as well as for the HI tax withheld from employees' wages. T F

T

Federal tax levies are not subject to the limits imposed on garnishments under the Consumer Credit Protection Act. T F

T

For child support garnishments, tips are considered part of an employee's disposable earnings. T F

T

For the purpose of a federal tax levy, the IRS defines take-home pay as the gross pay less taxes withheld and the other payroll deductions in effect before the tax levy was received. T F

T

In a payroll register having labor cost distribution columns, the total of each distribution column shows the amount of the gross wages or salaries for a particular department's wage expense. T F

T

In calculating overtime premium earnings at one and a half times the regular hourly rate, the overtime hours are multiplied by one-half the hourly rate of pay. T F

T

The employer keeps track of each employee's accumulated wages in the employee's earnings record. T F

T

The information needed in preparing a journal entry to record the wages earned, deductions from wages, and net amount paid each payday is obtained from the payroll register. T F

T

Under the EFTS, employers do not have to issue their employees paychecks. True False

True

Vacation expense should be recorded as a debit when the employee earns it. True False

True

An employee who is garnished creates a liability for the business. True False

True Although the garnishment would be deducted from the employee's pay, the business is responsible (liable) for remitting the deduction to the creditor.

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

Wages Expense

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: collecting the time sheets for the days accrued. using the same amount as the prior month's adjustment. using the wages of the salaried workers only. a percentage of the previous week's gross payroll. a percentage of the previous week's net payroll.

a percentage of the previous week's gross payroll.

An employer: a. can take 50% of an employee's disposable income for child support payments. b. should discharge any employee receiving a wage garnishment. c. must pay federal tax levies before any other deduction. d. under ERISA, must withhold pension and retirement benefits before any other deduction.

a. can take 50% of an employee's disposable income for child support payments.

The account "Workers' Compensation Insurance Expense": a. is used to record Workers' Compensation premiums paid by the company. b. is used to record the company's' liability to injured workers. c. is used to record Workers' Compensation premiums paid by the employee. d. is used to record Workers' Compensation payments to injured workers.

a. is used to record Workers' Compensation premiums paid by the company.

When employees take vacation and use vacation time: a. the expense has already been recorded. b. the account "Vacation Benefits Expense" is credited. c. the "Vacation Benefits Payable" account is credited. d. the account "Vacation Benefits Expense" is accrued.

a. the expense has already been recorded.

4. Amounts withheld from employees' wages for health insurance are credited to a liability account. A) True B) False

A) True

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

A. Wages Expense Wages Payable

30. 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

D) FUTA Taxes Payable- Cash

20. 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 amounts 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.

D) a percentage of the previous week's gross payroll.

16. 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

E) Union dues withheld

14. 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

E) a child support order

A garnishment cannot exceed 25 percent of an employee's gross pay. T F

F

At the time of depositing FICA taxes and employees' federal income taxes, the account FICA Tax Expense is debited for both the employees' and the employer's portions of the FICA taxes. T F

F

Direct deposit of paychecks can be forced on employees in every state. T F

F

Disposable earnings are the earnings remaining after withholding federal income taxes. T F

F

In all computerized payroll systems, there is still the need to manually post from the printed payroll journal entry to the general ledger. T F

F

In the case of a federal tax levy, the employee will notify the employer of the amount to take out of his or her paycheck. T F

F

In the case of multiple wage attachments, a garnishment for a student loan has priority over any other garnishment.. T F

F

The payroll register is used by employers in completing Forms W-2. T F

F

When recording the employer's payroll taxes, a liability account entitled Employers Payroll Taxes Payable is credited for the total taxes owed (FICA, FUTA, and SUTA). T F

F

Proving the payroll register entails sending company records to the IRS. True False

False

An accounting firm would pay higher Workers' Compensation Insurance premiums than a steel mill because their employee wages would be higher. True False

False Workers' Compensation Insurance premiums rise with the danger or hazard level of a job. Steel mills are more dangerous environments than accounting offices.

When remitting or depositing federal income taxes, the employer credits the cash account. True False

True When remitting or depositing federal income taxes, the employer credits the cash account.

Which of the following items would require an adjusting entry at the end of each accounting period? Garnishment for child support payments Withholding's for a 401(k) plan Vacation pay earned by employees Union dues withheld None of the above

Vacation pay earned by employees

Disposable earnings: a. are what is left over after the employee pays rent and utilities. b. are the part of the paycheck used to pay taxes. c. are the earnings remaining after withholding income taxes and other amounts required by law. d. are the earnings paid for optional employee benefits.

c. are the earnings remaining after withholding income taxes and other amounts required by law.

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

completing the journal entry to record the payroll.

End-of-Period Adjustments: a. must use the exact amounts withheld in order to balance the appropriate accounts (FICA, FUTA, SUTA, etc.) with the Form 940 reconciliation at the end of the year. b. are only necessary when employees are paid in cash at the end of the year. c. affect the cash account. d. are required when the fiscal accounting period does not coincide with the end of the payroll period.

d. are required when the fiscal accounting period does not coincide with the end of the payroll period.