Accounting Chapter 12

Payroll Register

A business form used to record payroll information

Employee Earnings Record

A business used to record details affecting payments made to an employee

Withholding Allowance

A deduction from total earnings for each person legally supported by a taxpayer, including the employee

Medicare Tax

A federal tax paid for hospital insurance

Social Security Tax

A federal tax paid for old-age, survivors,and disability insurance

How is net pay calculated?

By subtracting total deductions from total earnings.

A separate payroll checking account is used primarily to

Provide additional protection and control payroll payments

Tax Base

The maximum amount of earnings on which a tax is calculated

salary

The money paid for employee services

What does the payroll register summarize?

The payroll register summarizes the payroll for one pay period and shows total earnings, payroll withholding's and net pay of all employees.

pay period

The period covered by a salary payment

payroll

The total amount earned by all employees for a pay period

What is a payroll?

The total amount earned by all employees for a pay period.

Net Pay

The total earnings paid to an employee after payroll taxes and other deductions

Total earning

The total pay due for a pay period before

Payroll Taxes

Taxes based on the payroll of a business

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

false

Employee total earnings are calculated as regular hours x regular rate, plus overtime hours x overtime rate

true

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

true

Employers in many states are required to withhold state, city, or count income taxes from employee earnings

true

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

true

Payroll time cards can be used as the basic source of information to prepare a payroll

true

The columns of the employee earning record consist of the amount columns in a payroll register and an accumulated earnings column

true

The information used to prepare payroll checks is taken from a payroll register

true

When EFT is used, the employee does not receive an individual check

true

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

true

How many hours were worked by a Hobby Shack employee who arrived at 8:29 and departed at 12:02?

3/4hours

How many hours were worked by an employee who arrived at 8:10 a.m. and departed at 12:10 p.m. ?

4 hours

What are the total earnings of a Hobby Shack employee who worked 44 hours in a week and earns $11.00 per hour?

$484

How many hours were worked by an employee who arrived at 7:05 a.m. and departed at 6:05 p.m.?

11 hours

Why do companies complete employee earnings records?

Because a business must send a quarterly report to federal and state governments showing employee taxable earnings and taxes withheld from employee earnings.

Does the employer or employee pay social security tax and Medicare tax?

Both

Employee federal income tax with-holdings are based on what two factors?

Employee marital status and number of withholding allowances

Where does an employer get the information used to determine the amount of federal income tax to withhold from employees' earnings?

Form W-4 Employee's Withholding Allowance Certificate

How do payroll procedures differ for employees who request that their pay be deposited through electronic funds transfer?

Individual checks are not written and do not have to be distributed.

How does Hobby Shack calculate overtime earnings?

Overtime hours X the overtime rate

Why does Hobby Shack have a separate checking account for payroll checks?

To help protect and control payroll payments

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

false

A new earnings record is prepared for each employee each year

false

Social security tax is payed by the employer only

false

The amount of income tax withheld from each employee's total earnings is determined from the number of withholding allowances and by the employee's marital status.

false

The first task in preparing a payroll is to determine the number of days worked by each employee

false

Employee regular earnings are calculated as...

regular hours times regular rates

What is the source of the information that is recorded on each employee's payroll check stub?

the payroll register

Social security tax is calculated on...

total earnings and number of withholding allowances

A business is required by law to withhold federal income taxes from employee total earnings

true

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

true

A check for the total net pay is written and deposited in the payroll checking account

true

A single person will have less income tax withheld than a married employee

true

All deductions from employee wages are recorded in a payroll register

true

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

true

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

true

Businesses use payroll records to inform employees of their annual earnings and to prepare payroll reports for the government

true