The employee’s earnings record provides information for each of the following except:
a. completing Forms W2.
b. completing the journal entry to record the payroll.
c. determining when the accumulated wages of an employee reach cutoff levels.
d. preparing reports required by state unemployment compensation laws.
e. preparing the payroll register.
Unlike Form 941, there is no penalty for the late filing of Form 940.
a. True
b. False
Since the FUTA tax is a social security tax, it can be charged to the same expense
account as the other payroll taxes on the employer, the payroll taxes account.
a. True
b. False
Employees are liable for their FICA taxes only until the taxes have been collected from
their pay by their employer.
a. True
b. False
If an employer fails to file an employment tax return on the due date, a penalty based on
a certain percentage of the amount of tax required to be reported may be added to the
tax.
a. True
b. False
For FUTA purposes, an employer can be any one of the following except:
a. an individual.
b. a partnership.
c. a trust.
d. a corporation.
e. All of the above can be employers.
A discretionary bonus is included in an employee’s regular rate of pay.
a. True
b. False
If the third decimal place is less than 5, drop the third decimal place.
Also, use the minimum hourly wage of $7.25 in solving these problems and all that
follow.
Refer to Instruction 31. In this pay, Moss Company deducted OASDI taxes of
$5,276.24 and HI taxes of $1,233.95 from the $85,100.90 of taxable wages paid. What
is Moss Company’s portion of the social security taxes for:
a)OASDI
b)HI
The person who is not an authorized signer of Form 940 is:
a. the individual, if a sole proprietorship.
b. the accountant from the company’s independent auditing firm.
c. the president, if a corporation.
d. a fiduciary, if a trust.
e. All of the above are authorized signers.
The entry to record the employer’s payroll taxes usually includes credits to the liability
accounts for FICA (OASDI and HI), FUTA, and SUTA taxes.
a. True
b. False
FICA defines wages as including the cash value of meals provided for the convenience
of the employees.
a. True
b. False
Under SECA, all of an individual’s selfemployment income is counted in determining
the HI tax.
a. True
b. False
The IRA format of the SIMPLE plan allows employees to make taxfree contributions of
up to $12,500
a. True
b. False
The Equal Pay Act stipulates that there cannot be any wage differentials between the
sexes.
a. True
b. False
The standard deduction varies according to whether the wagebracket method or the
percentage method is used.
a. True
b. False
The entry made at the end of the accounting period to record wages incurred but unpaid
is:
a. Wages Expense
Wages Payable
b. Wages Expense
FICA Taxes Payable—OASDI
FICA Taxes Payable—HI
FIT Payable
Wages Payable
c. Wages Payable
Cash
d. Wages Expense
Cash
e. Wages Expense
Payroll Taxes
Wages Payroll
Employees of a state government hired before January 1, 1986, and covered by a public
retirement plan, are exempt from FICA coverage.
a. True
b. False
The taxes imposed under the Social Security Act consist of:
a. two taxes on employers.
b. two taxes on employees.
c. OASDI and HI taxes.
d. taxes on the net earnings of the selfemployed.
e. all of the above.
Employees must be given Form W2 on or before January 31 following the close of the
calendar year.
a. True
b. False
HTMLENTITY#8203HTMLENTITYWhich of the following is a part of the social
security program?
a. HTMLENTITY#8203HTMLENTITYFederal unemployment taxes (FUTA)
b. HTMLENTITY#8203HTMLENTITYState income tax withholding
c. HTMLENTITY#8203HTMLENTITYMedicare
d. HTMLENTITY#8203HTMLENTITYFederal income tax withholding
e. HTMLENTITY#8203HTMLENTITYAll are part of the social security program
ERISA provides for full vesting of the employer’s contributions in three years or
gradually over six.
a. True
b. False
The FLSA contains detailed specifications of the methods that employers must follow
in keeping time records.
a. True
b. False
To determine a pieceworker’s regular hourly rate for one week:
a. divide the total weekly earnings from piece rates and all other sources by the hours
worked in the week.
b. divide the total weekly earnings from piece rates by the number of pieces produced.
c. divide the total weekly earnings from piece rates, less earnings from other sources, by
the hours worked in a week.
d. add the total weekly earnings from piece rates and all other sources and divide by the
total number of pieces produced.
e. do none of the above.
Insurance agents paid solely on a commission basis are not considered employees under
FUTA.
a. True
b. False
A personal allowance:
a. amounted to $2,000 in 2018.
b. may be claimed to exempt a portion of the employee’s earnings from withholding.
c. is indexed for inflation every calendar quarter.
d. may be claimed at the same time with each employer for whom an employee is
working during the year.
e. for one person is a different amount for a single versus a married taxpayer.
An employer is required to submit a copy of the employee’s Form W4 to the IRS if the
employee has claimed 15 or more withholding allowances.
a. True
b. False
Asking applicants for their arrest records is illegal.
a. True
b. False
Businesses with $2,500 or less in quarterly tax liabilities can pay the taxes when they
file Form 941.
a. True
b. False
The FLSA requires that employees be given at least two 15minute rest periods each
workday.
a. True
b. False
In most states, the contribution reports and the wage information reports are filed
quarterly.
a. True
b. False
The trend toward outsourcing of payroll operations has weakened in recent years.
a. True
b. False
If an investigative consumer report is being issued, the applicant must be given a
written notice that the information obtained will be used in the employment decision.
a. True
b. False
The FICA tax rates and taxable wage bases are exactly the same for the employee and
employer when the employee makes $200,000 or less.
a. True
b. False
In January 2018, the minimum hourly wage was:
a. $9.35.
b. $12.15.
c. $10.00.
d. $8.15.
e. None of the above.
Retirement pay is taxable wages for FUTA purposes.
a. True
b. False
Instruction 31
Use the following tax rates, ceiling and maximum taxes:
Employee and Employer OASDI: 6.20% $127,200 $7,886.40
Employee and Employer HI: 1.45% No limit No maximum
Selfemployed OASDI: 12.4% $127,200 $15,772.80
Selfemployed HI: 2.9% No limit No maximum
HTMLENTITY#8203HTMLENTITY
Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable to
selfemployed.
HTMLENTITY#8203HTMLENTITY
Exhibit 41:
Use the following tables to calculate your answers.
Refer to Exhibit 41. Use the appropriate table to determine the amount to withhold for
federal income tax from each of the following biweekly wages (biweekly withholding
allowance = $155.80):
Patrick Patrone (single, 2 allowances), $925 wages__________
Carson Leno (married, 4 allowances), $1,195 wages__________
Carli Lintz (single, 0 allowances), $700 wages__________
Gene Hartz (single, 1 allowance), $2,500 wages__________
Mollie Parmer (married, 2 allowances), $3,600 wages__________
Exhibit 61
The totals from the first payroll of the year are shown below.
Total
EarningsFICA
OASDIFICA
HIFIT
W/HState
TaxUnion
DuesNet
Pay
$36,195.10 $2,244.10 $524.83$6,515.00$361.95$500.00$26,049.22
Refer to Exhibit 61. Journalize the adjustment for accrued wages for the following
Monday, which is the end of the accounting period. The gross payroll for that day is
$7,475.
Instruction 31
Use the following tax rates, ceiling and maximum taxes:
Employee and Employer OASDI: 6.20% $127,200 $7,886.40
Employee and Employer HI: 1.45% No limit No maximum
Selfemployed OASDI: 12.4% $127,200 $15,772.80
Selfemployed HI: 2.9% No limit No maximum
HTMLENTITY#8203HTMLENTITY
Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable to
selfemployed.
HTMLENTITY#8203HTMLENTITY
Instruction 51
Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages.
Refer to Instruction 51. Hunter Company had a FUTA taxable payroll of $192,700 for
the year. Since the company is located in a state that has 1.5% FUTA credit reduction
due to unpaid loans, determine Hunter’s FUTA tax liability for the year.
Exhibit 41:
Use the following tables to calculate your answers.
Refer to Exhibit 41. Edward Dorsey is a parttime employee, and during the biweekly
pay period he earned $395. In addition, he is being paid a bonus of $300 along with his
regular pay. If Dorsey is single and claims two withholding allowances, how much
would be deducted from his pay for FIT? (There are two ways to determine his
deduction—do not use table for percentage method.)
