Review Chapter 13 Payroll Accounting, Taxes, and Reports

Name:

True/False
Indicate whether the statement is true or false.

Each pay period the payroll information for each employee is recorded on each employee earnings record.

Separate payroll accounts for each employee are kept in the general ledger.

The payroll register and employee earnings records provide all the payroll information needed to prepare a payroll.

The column totals of an employee earnings record provide the debit and credit amounts needed to journalize a payroll.

The source document for payment of a payroll is the time card.

Amounts recorded in the General columns of a journal are posted individually to general ledger accounts.

Employers must pay to the government the taxes withheld from employee earnings.

Employer payroll taxes are business expenses.

Employer payroll taxes expense is based on a percentage of employee earnings.

10.

The employer social security tax rate is not the same as the employee social security tax rate.

11.

Federal unemployment insurance laws require that employers and employees pay taxes for unemployment compensation.

12.

An employer is not required to pay federal unemployment taxes on an employee who has already earned $7,000.00 during the calendar year.

13.

The transaction to record employer payroll taxes expense is journalized at the end of the quarter.

14.

The source document for journalizing employer payroll taxes is a check.

15.

Each employer is required by law to periodically report the payroll taxes withheld from employee salaries.

16.

Each employer who withholds income tax and social security and Medicare tax from employee salaries must furnish each employee with a quarterly statement.

17.

Form W-3, Transmittal of Income and Tax Statements, is sent to the Social Security Administration by February 28 each year.

18.

Employee withheld income tax, employee social security and Medicare tax, and employer social security and Medicare tax are paid periodically to the federal government in a combined payment.

19.

The 12-month period that ends on June 30th of the prior year is called the lookback period.

20.

The Internal Revenue Service provides businesses with a flowchart to assist them in determining when to make tax deposits.

21.

In the journal entry for a payroll, the amount debited to Salary Expense is the total of the Net Pay column of the payroll register.

22.

In the journal entry for a payroll, the amount credited to Cash is the total of the Total Earnings column of the payroll register.

23.

The tax base for Medicare tax is usually the same as the tax base for social security tax.

24.

If an employee's accumulated earnings are $6,500.00, and the employee earns another $1,500.00, the amount of new earnings subject to unemployment tax is $1,500.00.

25.

An employee who earns $1,000.00 semimonthly will have unemployment taxable earnings until the middle of May.

26.

Calculating federal and state unemployment tax is complicated because the state and federal unemployment tax regulations use different tax bases.

27.

The only reason an employee receives a Form W-2 Wage and Tax Statement from an employer is to check it for accuracy.

28.

The payment of payroll taxes with the government is referred to as a deposit.

29.

All businesses must use the Electronic Federal Tax Payment System to deposit payroll taxes.

30.

Some employers must deposit payments for withheld employees' federal income tax and social security and Medicare taxes on the next banking day.

Multiple Choice
Identify the choice that best completes the statement or answers the question.

31.

All the payroll information needed to prepare a payroll and tax reports is found on ____.

a.	Form W-4 and the employee earnings record
b.	Form W-4 and the payroll register
c.	Form W-4
d.	the payroll register and the employee earnings record

32.

Until the amounts withheld from employee salaries are paid by the employer, they are recorded as ____.

a.	assets	c.	salary expense
b.	liabilities	d.	revenue

33.

The source document for payment of a payroll is ____.

a.	a receipt	c.	a memorandum
b.	a check	d.	none of the above

34.

The entry to journalize paying a semimonthly payroll less deductions for employee income tax, social security and Medicare tax, and U.S. Savings Bonds is a credit to Cash and the liability accounts and a debit to ____.

a.	Salary Expense	c.	Payroll Taxes Expense
b.	Unemployment Tax Payable-Federal	d.	Cash

35.

Employers must pay payroll taxes for ____.

a.	social security and Medicare and sales taxes
b.	social security and Medicare, federal unemployment, and state unemployment taxes
c.	federal income and social security and Medicare taxes
d.	none of the above

36.

The employer social security tax rate is based on ____.

a.	the rate established for employers
b.	the same rate and earnings as employee social security tax
c.	6.2 percent of wages paid
d.	none of the above

37.

Social security and Medicare taxes are paid by ____.

a.	employers only	c.	employers and employees
b.	employees only	d.	none of the above

38.

The total earnings subject to federal unemployment tax is referred to as ____.

a.	unemployment taxable earnings	c.	gross earnings
b.	taxable earnings	d.	total earnings

39.

In the entry to journalize employer payroll taxes expense for a semimonthly period, the account debited would be ____.

a.	Salary Expense	c.	Payroll Taxes Expense
b.	Unemployment Tax Payable-Federal	d.	Cash

40.

In the entry to journalize employer payroll taxes expense for a semimonthly period, an account credited would be ____.

a.	Salary Expense	c.	Payroll Taxes Expense
b.	Unemployment Tax Payable-Federal	d.	Cash

41.

Each employer must file a federal tax return showing the federal income tax and social security and Medicare taxes due the government ____.

a.	monthly	c.	yearly
b.	quarterly	d.	semiannually

42.

Each employer must file a federal tax return showing the federal income tax and social security and Medicare taxes due the government on a Form ____.

a.	W-2	c.	940
b.	W-3	d.	941

43.

The report that shows total year's earnings and amounts withheld for taxes for an employee is prepared on Form ____.

a.	W-2	c.	940
b.	W-3	d.	941

44.

Employers are required to furnish each employee an annual statement of earnings and withholdings before ____.

a.	December 31 of the current year
b.	January 1 of the following year
c.	January 15 of the following year
d.	January 31 of the following year

45.

The form used for the transmittal of the previous year's earnings and payroll taxes withheld for all employees is Form ____.

a.	W-2	c.	940
b.	W-3	d.	941

46.

The source document for paying employee income tax and social security and Medicare tax is ____.

a.	a check	c.	a memorandum
b.	a receipt	d.	none of the above

47.

In the entry to journalize paying the liability for the first quarter federal unemployment tax, an account debited would be ____.

a.	Salary Expense	c.	Payroll Taxes Expense
b.	Unemployment Tax Payable-Federal	d.	Cash

48.

In the entry to journalize paying the liability for the first quarter federal unemployment tax, the account credited would be ____.

a.	Salary Expense	c.	Payroll Taxes Expense
b.	Unemployment Tax Payable-Federal	d.	Cash

49.

In general, employers are required to pay state unemployment taxes ____.

a.	monthly
b.	during the month following each calendar quarter
c.	annually
d.	none of the above

50.

The source document for paying state unemployment tax is ____.

a.	a check	c.	a memorandum
b.	a receipt	d.	none of the above

51.

The payroll journal entry is based on the totals of ____.

a.	Earnings Total column, each deduction column, and Net Pay column
b.	Earnings Total column, Earnings Regular and Overtime Earnings, and Deductions Total columns
c.	Earnings Regular, Earnings Overtime, and Deductions Total columns
d.	Earnings Total column, Earnings Regular and Earnings Overtime Total columns

52.

The total of the Net Pay column of the payroll register is credited to ____.

a.	a revenue account	c.	an asset account
b.	an expense account	d.	a liability account

53.

When a semimonthly payroll is paid, the credit to Cash is equal to the ____.

a.	total earnings of all employees
b.	total deductions for income tax and social security and Medicare tax
c.	total deductions
d.	net pay of all employees

54.

The Total Earnings column total is journalized as a debit to ____.

a.	Cash	c.	Employee Income Tax Payable
b.	Salary Expense	d.	Social Security Tax Payable

55.

The total of the Federal Income Tax column of a payroll register is credited to

a.	a revenue account	c.	a liability account
b.	an expense account	d.	an asset account

56.

A federal tax used for state and federal administrative expenses of the unemployment program is ____.

a.	social security tax	c.	federal unemployment tax
b.	Medicare tax	d.	state unemployment tax

57.

A state tax used to pay benefits to unemployed workers is ____.

a.	social security tax	c.	unemployment tax
b.	Medicare tax	d.	state unemployment tax

58.

To record the employer payroll taxes expense, the following accounts are credited:

a.	Payroll Taxes Expense and Employee Income Tax Payable
b.	Employee Income Tax Payable, Social Security Tax Payable, Medicare Tax Payable, Unemployment Tax Payable-Federal, and Unemployment Tax Payable-State
c.	Social Security Tax Payable, Medicare Tax Payable, Unemployment Tax Payable-Federal, and Unemployment Tax Payable-State
d.	none of the above

59.

To record the total federal tax payment for employee income tax, social security tax and Medicare tax, the account credited is ____.

a.	Cash	c.	Social Security Tax Payable
b.	Employee Income Tax Payable	d.	Medicare Care Tax Payable

60.

To record the payment of federal unemployment tax, the account debited is ____.

a.	a revenue account	c.	a liability account
b.	an expense account	d.	an asset account