Chapter 8 Practice Quiz

The employer becomes liable for payroll taxes when.... a) the employer earns the wages b) the employee is paid the wages c) the federal tax return is filed d) the payroll tax return is filed

answer: A (the employee earns the wages)

The rating assigned to an employer by a state based on the employer's record of employment and unemployment. a) tax rating b) merit rating c) FUTA tax credit d) SUTA tax credit

answer: B (merit rating) - good history, lower tax rate - bad history. higher tax rate

Payroll tax expense is debited to record .... a) the employee's FIT b) the employees portion of FICA c) the employee's portion of FICA d) the emplyee's FUTA

answer: C ( the emplpoyee's portion of FICA)

An insurance program that provides benefits to workers who are injured on the job is called? a) federal unemployment insurance b) state unemployment insurance c) workers' compensation insurance d) social security

answer: C (workers' compensation insurance)

The Employer's Annual Federal Unemployment Tax Return is called: a) form W-2 b) form W-3 c) form W-4 d) form 940

answer: D (form 940)

Which of the following is the correct journal entry to record the payment of Wages & Salaries Payable? a) Debit: Wages & Salaries Payable | Credit: Payroll Tax Expense b) Debit: Cash | Credit: Wages & Salaries Payable c) Debit: Wages & Salaries | Credit: Cash d) none of the above

Answer: C (Debit: Wages & Salaries | Credit: Cash)

Which of the following is the correct journal entry to record the payment of SUTA Tax Payable.. a) Debit: SUTA Tax Payable | Credit: Cash b) Debit: SUTA Tax Payable | Credit: Payroll Tax Expense c) Debit: Payroll Tax Expense | Credit: SUTA Tax Payable d) none of the above

answer: A (Debit: SUTA Tax Payable | Credit: Cash )

Form 941 requires the reporting of the following taxes? a) FUTA and FICA b) FICA and FIT c) FICA, FIT, and FUTA d) FICA

answer: B (FICA and FIT)

Which of the following tax is paid by both the emplyee and the employer? a) FUTA b) FICA c) SUTA d) none of the above

answer: B (FICA)

The annual report by an employer to each employee showing the employee's wages subject to FICA and federal income taxes along with withholdings for various taxes. a) form 940 b) form 941 c) form W-4 d) form W-2

answer: D (form W-2) tax return