Chapter 12 Payroll Accounting pt 2

The federal income tax amount withheld depends on three factors:

(1) the employee's marital status, (2) the number of allowances the employee claims, and (3) the employee's gross earnings. The first two items are found on Form W-4, the Employee's Withholding Allowance Certificate.

The overtime rate was set by the

Fair Labor Standards Act of 1938.

true

Form W-4 lists the marital status and the number of exemptions claimed by each employee

How Payroll Information Can Be Used

To determine if overtime is justified. To compare actual amounts to budgeted amounts to reveal unplanned overtime.

Methods of Paying Employees

check, direct deposit

false

employee's earnings records are kept on a monthly basis to make it easier to complete government reports that are required

The amount of tax withheld from an employee's earnings depends on the number of _______ claimed.

exemptions

True

if an employee qualifies as exempt, he or she may not be required to pay federal or state income taxes in a given year

time card

most business use a ____ to keep track of an hourly wage employee's hours

true

most business use computers to prepare the payroll .

false

most employees claim more than eight exemptions on their W-4 form

false

most factory employees are paid on a salary basis

The amount the employee receives for a pay period is _____ .

net earnings

false

overtime is paid to most employees after 44 hours of work in a pay week

false

payroll is not a major expense of most businesses

both federal and state laws require businesses to keep

payroll records and to report employees' earnings.

When calculating hours worked, the time is rounded to the nearest _____ hour.

quarter

round when _____ and dont round when _____

round when doing taxes dont round when dealing with employer.

Two components of FICA are:

social security and medicare

False

an employee's gross earnings may be calculated by any of the four methods, but never by a combination of these methods

overtime rate

the ___ is 1.5 times an employees regular hourly rate of pay and is paid for all hours worked over 40 hours per week.

payroll register

the ____ is a form that summarizes information about employees earnings for each pay period

gross earnings

the ____ is the total amount earned by the employee in the pay period

true

the account medicare tax payable is a liability of the business

net pay

the amount of money actually received by the employee after all deductions are subtracted is called the ___

False

the amount of taxes withheld from each employee's paycheck is the exact amount that the employee will owe at the end of the tax year

pay period

the amount of time for which an employee is paid is called the ____.

True

the employee payroll is a major expense for most companies

True

the employer acts as a tax collection agent for the federal government

false

the number of hours worked multiplied by the hourly wage gives the net earnings for the pay period

true

the payroll register is the source of information for preparing the paychecks

true

the payroll register summarizes information about employees earnings for the pay period

payroll clerk

the person who is responsible for preparing the payroll is called an ____

true

the social security system was established by the federal insurance contributions act.

true

the social security tax and medicare tax are both part of the FICA system

accumulated earnings

the year to date gross earnings of an employee are ___

Most companies set up a payroll system to ensure that

their employees are paid on time and that payroll checks are accurate.

True

to ensure that taxpayers have the funds to pay their taxes, employers are required to withhold a certain amount of money from employees earnings

The 401(k) plan is a popular

voluntary payroll deduction

True

when a company has only a few employee's paychecks are often written on the company's regular checking account

commission

an__ is paid to the employee as a percentage of the employee's sales

A well-designed payroll system achieves two goals:

1. The collection and processing of all information needed to prepare and issue payroll checks. 2. The generation of payroll records needed for accounting purposes and for reporting to government agencies, management, and others.

the medicare tax rate is

1.45

the social security tax rate is

6.2

payroll deductions

Amounts of money withheld from an employee's gross earnings.

salary

a FIXED amount of money paid to an employee for each pay period.

deduction

a ___ is an amount subtracted from gross earnings.

direct deposit

a ___ is the deposit by the employer of an employee's net pay into a personal bank account.

true

a business may obtain a daily printout on employee work hours by using electronic badge readers

payroll

a list of employees in a business and the earnings due each employee for a specific period of time is ____

true

a payroll register is prepared for each pay period.

false

a person can change their social security at any time

true

a person has the same social security number for life

401(k)

a type of account that allows employees to defer paying taxes until retirement is called _____.

exemption

an allowance claimed by a taxpayer that reduces the amount of taxes that must be paid is an ____.

wage

an amount paid to employees at a specific rate per hour is___ .