True/False
Indicate whether the sentence or statement is true
or false.
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1.
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The
amount of social security tax withheld depends on an employee's gross earnings, martial status, and
number of withholding allowances.
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2.
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Federal law requires that social security, medicare, and federal income taxes be
deducted from the gross pay of most employees.
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3.
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Once
an employee's year-to-date wages reach a certain amount prescribed by law, social security tax is no
longer withheld.
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4.
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Employees submit Form W-4 to their employers to show the number of withholding
allowances they claim for federal income tax withholding purposes.
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5.
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Circular E, the Employer's Tax Guide, contains federal income tax withholding
tables.
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6.
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A
company is required to withhold various employee taxes from amounts paid independent
contractors.
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7.
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The
medicare tax is levied to provide medical care for the employee and the employee's spouse after the
employee reaches age 65.
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8.
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The
maximum base for the social security tax is the same as that for the medicare tax.
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9.
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The
employee's marital status is one factor that determines the amount of federal income tax withheld by
the employer.
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10.
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The
overtime rate is one and one-half times the regular hourly rate.
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11.
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If an
employee whose regular hourly rate is $7 and whose overtime rate is 1.5 times the regular rate works
42 hours in one week, the employee's gross pay is $294.
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12.
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Earnings is excess of the social security base amount are not taxed.
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13.
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Salaried employees who hold supervisory or managerial positions generally are not
subject to wage and hour laws.
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14.
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An
employee must attach one copy of Form W-2 to his or her personal federal income tax
return.
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Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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15.
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Which
of the following is a factor in the determination of the amount of social security tax to withhold
from an employee's pay? a. | hours worked during the pay period | b. | marital
status | c. | withholding allowances claimed on Form
W-4 | d. | Gross
wages | | |
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16.
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Lisa
Ramos has a regular hourly rate of $8.75. In a week when she worked 40 hours and had deductions
of $50 for federal income tax, $22.75 for social security tax, and $5.25 for medicare tax, her net
pay was a. | $350. | c. | $300. | b. | $272. | d. | $338. | | | | |
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17.
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All
details related to an employee's earnings, deductions, and net pay throughout the year would be found
in a. | the payroll
register. | b. | the individual earnings record. | c. | the general
journal. | d. | the Wages Expense account in the general
ledger. | | |
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18.
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The
column totals in a payroll register a. | are used in the journal entry to record the
payroll. | b. | are posted directly to the general ledger
accounts. | c. | are unnecessary. | d. | are neither
recorded in a journal entry nor posted to the general ledger accounts. | | |
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19.
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The
amount debited to Wages Expense when a payroll is recorded is the a. | regular gross
earnings. | c. | net
earnings. | b. | earnings after taxes. | d. | total gross earnings. | | | | |
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20.
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When
checks are issued to employees after the entry to record the payroll has been made, the accountant
would a. | debit Salaries
Expense, debit Wages Expense, and credit Cash. | b. | debit Salaries,
and Wages Payable, debit Social Security Tax Payable, debit Medicare Tax Payable, debit Employee
Income Tax Payable, and credit Cash. | c. | debit Salaries and Wages Payable and credit
Cash. | d. | debit Salaries and Wages Payable and credit Salaries Expense
and Wages Expense. | | |
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21.
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The
maximum base for the social security tax is. a. | the same as that for the medicare
tax. | b. | higher than that
for the medicare tax. | c. | lower than that for the medicare tax. | d. | varies according
to the employee's earnings. | | |
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22.
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An
employee whose regular hourly rate is $6 and whose overtime rate is 1.5 times the regular rate worked
44 hours one week. The employee's gross pay was a. | $264. | c. | $396. | b. | $276. | d. | $252. | | | | |
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23.
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Each
type of deduction made from the employees' earnings is recorded in a separate a. | asset
account. | c. | liability
account. | b. | expense account. | d. | revenue account. | | | | |
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24.
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At
the beginning of the current pay period an employee had $6,700 cumulative earnings. The
employee earned $400 during the current pay period. If the FUTA base is $7,000, the employer
must pay FUTA tax on a. | $100. | c. | $400. | b. | $300. | d. | $200. | | | | |
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25.
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Which
of the following taxes is not withheld from an employee's pay? a. | Federal income
tax. | c. | FUTA
tax. | b. | Social security
tax. | d. | Medicare
tax | | | | |
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Numeric Response
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Assume a 6.2% tax on the 1st %62,400 for FICA--Soc.Sec., Income Taxes at 18% of gross
pay, a 1.45% tax on all earnings for FICA--Medicare, a FUTA tax rate of .8% on the 1st $7,000, and a
SUTA tax rate of 2.7%on the 1st $7,000.
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26.
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Joe
Abbott had cumulative earnings before this pay period of $6,860. Assuming he worked 40
hours this week and makes $5.50 per hour, what was his net pay?
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27.
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Bob
Bingham had cumulative earnings before this week of $61,950. Assuming he worked 45.5
hours and made $18.75 per hour, what amount should be deducted for
FICA--Soc.Sec.?
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28.
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Carl
Caldwell had cumulative earnings of $6,740 before this week. Assuming he worked 38 hours
and made $5.50 per hour, what FICA--Medicare amount should be deducted from his
pay?
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29.
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Darlene Dalton had $63,000 in cumulative earnings before this week.
Assuming she worked 48 hours this week and made $20 per hour, what FICA--Soc.Sec. amount
should be deducted from her pay?
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