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Chapter 6
1. An employee’s marital status and number of withholding allowances never appear on the payroll register.
a.
True
b.
False
2. Companies usually provide a separate column in the payroll register to record the employer's payroll taxes.
a.
True
b.
False
3. An employer will use the payroll register to keep track of an employee's accumulated wages.
a.
True
b.
False
4. In order to prepare Forms W-2, an employer would utilize the employee’s earnings record.
a.
True
b.
False
5. Once the journal entry for the payroll is complete, the information is posted to the appropriate general ledger accounts.
a.
True
b.
False
6. Deductions from gross pay in the payroll register are reflected on the credit side of the journal entry to record the
payroll.
a.
True
b.
False
7. If wages are paid weekly, postings to the employee’s earnings record would be done once a month.
a.
True
b.
False
8. Each payday, the total of net pays that the employer incurs is the wage expense that must be debited.
a.
True
b.
False
Chapter 6
9. Tax withholdings from employees' pays reduce the amount of the debit to Salary Expense in the payroll entry.
a.
True
b.
False
10. The wage and salaries expense account is an operating expense account debited for total net pay each payroll period.
a.
True
b.
False
11. FIT Payable is a liability account used to record employees' withheld federal income tax and also the employer's
match of that tax.
a.
True
b.
False
12. A debit to the employees FIT payable account removes the liability for the amount of federal income taxes withheld
from employees’ wages.
a.
True
b.
False
13. Amounts withheld from employees' wages for health insurance are credited to a liability account.
a.
True
b.
False
14. When withheld union dues are turned over to the union by the employer, a journal entry is made debiting the liability
account and crediting the cash account.
a.
True
b.
False
15. Under the provisions of the Consumer Credit Protection Act, an employer can discharge an employee simply because
the employee's wage is subject to garnishment for a single indebtedness.
a.
True
b.
False
Chapter 6
16. Under the Consumer Credit Protection Act, disposable earnings are the earnings remaining after any deductions for
health insurance.
a.
True
b.
False
17. Tips received by employees in excess of tip credit amount are not included as disposable earnings subject to
garnishment
a.
True
b.
False
18. Service charges that are passed on to the employee by the employer are not part of the disposable earnings subject to
garnishment.
a.
True
b.
False
19. The total of the net amount paid to employees each payday is credited to either the cash account or the salaries payable
account.
a.
True
b.
False
20. Every state allows employers to make e-payment options as a condition of employment.
a.
True
b.
False
21. Under the Uniform Unclaimed Property Act, any unclaimed paychecks must be turned over to the state after the next
payday.
a.
True
b.
False
22. FUTA Taxes Payable is an expense account in which are recorded the employer's federal unemployment taxes.
a.
True
Chapter 6
b.
False
23. The payroll taxes incurred by an employer are FICA, FUTA, and SUTA.
a.
True
b.
False
24. The payroll taxes account is an expense account that is debited for the FICA, FUTA, and SUTA taxes on the
employer.
a.
True
b.
False
25. The FICA taxes on the employer represent both business expenses and liabilities of the employer.
a.
True
b.
False
26. 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
27. The employer’s payroll tax expenses are recorded by all employers at the time these taxes are actually paid.
a.
True
b.
False
28. FICA Taxes Payable—OASDI is a liability account debited for the employer's portion of the FICA tax.
a.
True
b.
False
29. Since the credit against the FUTA tax (for SUTA contributions) is made on Form 940, the employer's payroll tax
entries should include the FUTA tax at the gross amount (6.0%).
a.
True
b.
False
Chapter 6
30. The FUTA tax part of the payroll tax entry is recorded at the net amount (0.6%) of the taxable payroll.
a.
True
b.
False
31. Since FUTA tax is paid only once a quarter, the FUTA tax expense is recorded only at the time of payment.
a.
True
b.
False
32. At the time that the entry is made to record the employer’s payroll taxes, the SUTA tax is recorded at the net amount
(0.6%).
a.
True
b.
False
33. 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
34. If employees must contribute to the state unemployment fund, this deduction should be shown in the payroll tax entry.
a.
True
b.
False
35. When the federal tax deposit is made, the employees’ and employer’s shares of FICA taxes are paid along with the
employees' FIT taxes withheld.
a.
True
b.
False
36. In the adjusting entry to accrue wages at the end of the accounting period, there is no need to credit any tax
withholding accounts.
a.
True
b.
False
Chapter 6
37. The adjusting entry to record the accrued vacation pay at the end of an accounting period includes credits to the tax
withholding liability accounts.
a.
True
b.
False
38. Since vacation time is paid when used, there is no need to accrue this time in a liability account at the end of each
accounting period.
a.
True
b.
False
39. Union Dues Payable is a liability account credited with the deductions made from union members' wages for their
union dues.
a.
True
b.
False
40. Posting to the general ledger for payroll entries is done only at the end of each calendar year.
a.
True
b.
False
41. Carmen Gaetano worked 46 hours during this payweek. He is paid time-and-a-half for hours over 40 and his pay rate
is $17.90/hour. What was his overtime premium pay for this workweek?
a.
$107.40
b.
$161.10
c.
$50.70
d.
$53.70
e.
$26.85
42. The employee's earnings record provides information for each of the following except:
a.
completing Forms W-2.
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.
Chapter 6
43. Which of these accounts shows the total gross earnings that the employer incurs as an expense each payday?
a.
Payroll Taxes
b.
Federal Income Taxes Payable
c.
Wages Expense
d.
Salaries Payable
e.
None of the above
44. The garnishment that takes priority over all others is :
a.
a federal tax levy
b.
a government student loan
c.
a creditor garnishment
d.
an administrative wage garnishment
e.
a child support order
45. Which of the following accounts is an expense account in which an employer records the FICA, FUTA, and SUTA
taxes?
a.
Wages Expense
b.
Payroll Taxes
c.
SUTA Taxes Payable
d.
Salaries Payable
e.
None of the above
46. Which of the following is not an expense of the employer?
a.
FUTA tax
b.
FICA tax—HI
c.
FICA tax—OASDI
d.
SUTA tax
e.
Union dues withheld
47. When recording the deposit of FUTA taxes owed, the proper entry is:
a.
FUTA Tax Expense
Cash
b.
Payroll Taxes
Cash
Chapter 6
c.
Payroll Taxes
FUTA Taxes Payable
d.
FUTA Taxes Payable
Cash
e.
FUTA Tax Expense
FUTA Taxes Payable
48. 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
49. Which of the following items would require an adjusting entry at the end of each accounting period?
a.
Garnishment for child support payments
b.
Withholdings for a 401(k) plan
c.
Vacation pay earned by employees
d.
Union dues withheld
e.
None of the above
50. In recording the monthly adjusting entry for accrued wages at the end of the accounting period, the amount of the
adjustment would usually be determined by:
a.
collecting the timesheets for the days accrued.
b.
using the same amount as the prior month's adjustment.
c.
using the wages of the salaried workers only.
d.
a percentage of the previous week's gross payroll.
e.
a percentage of the previous week's net payroll.
Exhibit 6-1
Chapter 6
The totals from the first payroll of the year are shown below.
Total
Earnings
FICA
OASDI
FICA
HI
FIT
W/H
State
Tax
Union
Dues
Net
Pay
$36,195.10
$2,244.10
$524.83
$6,515.00
$361.95
$500.00
$26,049.22
51. Refer to Exhibit 6-1. Journalize the entry to record the payroll.
52. Refer to Exhibit 6-1. Journalize the entry to record the employer's payroll taxes (assume a SUTA rate of 3.7%).
53. Refer to Exhibit 6-1. Journalize the entry to deposit the FICA and FIT taxes.
54. Refer to Exhibit 6-1. 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.
