Chapter 13 Payroll Liabilities and Tax Records
unemployment taxes
Collected to provide funds for workers who are temporarily unemployed
Normal Balance for a Payroll account
Credit
Normal balance for an Expense Account
Debit
Form 940
Annual form to report the employer's federal unemployment tax
The entry for Salaries Expense is recorded each pay period but the entry for Payroll Tax Expense is recorded only at the end of the year.
FALSE
When a business transfers money from its regular checking account to the payroll checking account, the check is written for the amount of *gross earnings*
FALSE *Net Pay*
Federal withholding taxes and social security taxes are normally paid *once a year* by the employer
FALSE *Quarterly*
*Employees' wages* are a liability of the business
FALSE Taxes are liabilities. Wages are paid off immediately
Form 8109
Federal Tax Deposit Coupon, identifies the type of tax and tax period
Federal Unemployment Tax Act (FUTA)
Federal Unemployment law requiring employers to pay unemployment taxes
Federal Deposit tax coupon
Form that is prepared and sent with the employer's check to show the amount of federal payroll taxes being sent to the government
What are taxes in relation to the business?
Liabilitites
How often are taxes paid?
Once a quarter
What are employee and employer taxes in relation to the business?
Operating Expenses
What are the FICA taxes?
Social Security Tax and Medicare tax
State Unemployment Tax Act (SUTA)
State Unemployment law requiring employers to pay unemployment taxes
The cash in bank account is credited for the total amount that is paid by the employer to the employees
TRUE
Payroll Tax Expense
The account used to record the employer's payroll taxes, which are business expenses
Form 941
The employer's quarterly federal tax return that reports accumulated amounts of FICA and federal income taxes withheld from employees' earnings, as well as FICA tax owned by the employer
Salaries Expense
The expense account often used to record employees' earnings - = gross pay of all employees
Form W-3
Transmittal of Wage and Tax Statements; summarizes the information on Forms W-23
Electronic Federal Tax Payment System (EFTPS)
Used by larger businesses to make deposits
Form W-2
Wage and Tax Statement; summarizes an employee's earnings and withholding for the calendar year; reports 1. gross earnings 2. federal income tax withheld 3. FICA taxes withheld 4. state and local income taxes withheld