True/False
Indicate whether the
statement is true or false.
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1.
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The money paid for employee services is a salary.
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2.
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The period covered by a salary payment is a pay period.
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3.
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All businesses base their salary payments on the same length of time.
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4.
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A pay period may be weekly.
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5.
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The total amount earned by all employees for a pay period is a payroll.
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6.
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A payroll system must include an accurate record of the time each employee has
worked.
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7.
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Total earnings are sometimes referred to as gross pay.
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8.
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Businesses must withhold federal income tax from employee total earnings.
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9.
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Payroll taxes withheld represent a liability for an employer until payment is
made.
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10.
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Federal income tax is withheld from employee earnings in all but two
states.
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11.
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The marital status and withholding allowances of an employee affect the amount
of federal income tax withheld.
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12.
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No employees are exempt from having federal income taxes withheld.
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13.
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Medicare is funded by the federal government but not under the social security
law.
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14.
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Social security tax is a federal tax paid by employees and employers for
old-age, survivors, and disability insurance.
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15.
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A payroll ledger is a business form used to record payroll information.
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16.
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A separate checking account for payroll checks helps to protect and control
payroll payments.
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17.
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A business may decide to pay employee salaries every week, every two weeks,
twice a month, or once a month.
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18.
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Payroll time cards can be used as the basic source of information to prepare a
payroll.
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19.
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The first task in preparing a payroll is to determine the number of days worked
by each employee.
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20.
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Payroll taxes are based on employee total earnings.
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21.
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Employee total earnings are calculated as regular hours x regular rate, plus
overtime hours x overtime rate.
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22.
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Employers in many states are required to withhold state, city, or county income
tax from employee earnings.
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23.
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Federal law requires that each employer have on file a properly completed Form
W-2, Employee's Withholding Allowance Certificate, for each employee.
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24.
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A single person will have less income tax withheld than a married
employee.
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25.
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Social security tax is paid by the employer only.
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26.
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An act of Congress can change the social security tax base and tax rate at any
time.
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27.
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When an employee's earnings exceed the tax base, no more social security
tax is deducted.
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28.
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All deductions from employee wages are recorded in a payroll register.
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29.
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The columns of the employee earnings record consist of the amount columns in a
payroll register and an accumulated earnings column.
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30.
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The information used to prepare payroll checks is taken from a payroll
register.
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Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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31.
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The period covered by a salary payment is a ____.
a. | bimonthly base | c. | pay period | b. | pay schedule | d. | payroll |
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32.
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The total amount earned by all employees for a pay period is a ____.
a. | time card | c. | wage | b. | salary | d. | payroll |
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33.
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The total pay due for a pay period before deductions is ____.
a. | gross pay | c. | total earnings | b. | gross earnings | d. | all of the
above |
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34.
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Employee regular earnings are calculated as ____.
a. | regular hours times regular rate | c. | total hours plus overtime
rate | b. | total hours divided by regular rate | d. | overtime hours minus overtime
rate |
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35.
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Until payment is made, payroll taxes for an employer are ____.
a. | an asset | c. | capital | b. | a liability | d. | an expense |
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36.
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Federal income tax is withheld from employee earnings ____.
a. | only in those states electing to do so | b. | in all states with over 10,000,000
population | c. | only in states where a state income tax is levied | d. | in all 50
states |
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37.
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All employees must report their withholding allowances on a ____.
a. | payroll register | c. | Form W-4 | b. | memorandum | d. | Form W-2 |
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38.
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A deduction from total earnings of each person legally supported by a taxpayer
is a ____.
a. | payroll tax | c. | federal income tax | b. | withholding allowance | d. | worker's
allowance |
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39.
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The withholding allowances of an employee affect ____.
a. | social security tax withheld | c. | federal unemployment tax
owed | b. | federal income tax withheld | d. | state unemployment tax owed |
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40.
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Medicare is for people who ____.
a. | have a disability | c. | have reached retirement age | b. | are in the
hospital | d. | are under 50 years
of age |
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41.
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Accurate and detailed payroll records ____.
a. | do not have to be retained | b. | must be maintained | c. | are the
responsibility of the employee, not the business | d. | none of the
above |
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42.
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A business form used to record payroll information is ____.
a. | a wage register | c. | a payroll register | b. | a payroll tax register | d. | an employee time
card |
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43.
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Each employee name is listed in a payroll register along with ____.
a. | employee number | c. | withholding allowances | b. | marital
status | d. | all of the
above |
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44.
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Social security tax is calculated by ____.
a. | multiplying total earnings by the tax rate | b. | multiplying net
earnings by the tax rate | c. | using a tax table | d. | none of the
above |
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45.
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The total earnings paid to an employee after payroll taxes and other deductions
is recorded in the payroll register ____.
a. | Gross Pay column | c. | Net Pay column | b. | Total Earnings column | d. | Total Deductions
column |
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46.
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Individual payroll checks are usually written on ____.
a. | a company's regular checking account | b. | a special payroll
checking account | c. | a special purposes account | d. | an employee earnings
account |
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47.
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Some businesses deposit employee net pay directly to each employee bank account
by using ____.
a. | payroll checks | c. | EFT | b. | payroll registers | d. | none of the
above |
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48.
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A business form used to record details affecting payments made to an employee is
____.
a. | an employee earnings record | b. | a payroll journal | c. | an employee accounts
payable record | d. | a tax withholding form |
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49.
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The Accumulated Earnings column of the employee earnings record ____.
a. | shows net pay for the year | b. | is the total earnings since the first of the
year | c. | shows net pay for one quarter | d. | is the gross earnings for one
quarter |
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50.
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The amount on the employee earnings record used to determine if certain payroll
taxes apply to an employee's earnings is ____.
a. | net pay | c. | gross earnings | b. | accumulated earnings | d. | social security
taxes |
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