True/False
Indicate whether the sentence or statement is true
or false.
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1.
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Medicare taxes are levied in an equal amount on both employers and
employees.
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2.
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Disability benefits for the worker and the worker's dependents are provided by the
Federal Insurance Contribution Act.
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3.
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The
FUTA tax is used to finance benefits for employees who become unemployed.
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4.
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The
frequency of deposits of federal income taxes withheld and social security and medicare taxes is
determined by the amount owed.
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5.
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A
business pays the social security tax at the same rate and on the same taxable wages as its
employees.
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6.
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The
entry to record the social security and medicare taxes levied on a business includes a debit to
Payroll Taxes Expense.
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7.
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FUTA
tax, like social security tax, is levied on both the employer and the employee and so is withheld
from employee's pay.
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8.
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The
entry to record the employer's payroll taxes would include a debit to an expense account and a credit
to one or more liability accounts.
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9.
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The
accountant obtains information about wages subject to payroll taxes from the payroll
register.
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10.
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Most
commercial banks are authorized to accept the employee's tax deposits for federal income taxes
withheld and the employer's and employees' shares of social security taxes.
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11.
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At
the end of each calendar quarter, the individual earnings records are totaled for the
quarter.
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12.
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The
employer sends one copy of the Form W-2 for each employee to the Internal Revenue
Service.
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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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13.
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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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14.
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Circular E, the Employer's Tax Guide, contains withholding
information a. | for social
security and medicare taxes only. | b. | for federal income taxes only. | c. | for social
security, medicare, and federal income tax taxes. | d. | for federal and
state income taxes. | | |
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15.
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Employees' payments for federal income taxes withheld and social security and medicare
taxes are periodically a. | sent directly to the Internal Revenue
Service. | b. | deposited in a special-purpose bank account, controlled by the
company, until year-end when the funds are sent to the U.S. Treasury
Department. | c. | sent to the local office of the Internal Revenue
Service. | d. | deposited in a government-authorized financial
institution. | | |
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16.
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On
Form 941, the Employer's Quarterly Federal Tax Return, a firm calculates its liability for the
quarter for a. | federal income
taxes withheld, social security and medicare taxes, and FUTA taxes. | b. | federal income
taxes withheld and social security and medicare taxes. | c. | social security
and medicare taxes and FUTA taxes. | d. | federal and state income taxes
withheld. | | |
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17.
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To
record the deposit of FUTA tax, the accountant would a. | debit Payroll
Taxes Expense and credit Federal Unemployment Tax Payable. | b. | debit Payroll
Taxes Expense and credit Cash. | c. | debit Federal Unemployment Tax Payable and credit
Cash. | d. | debit Social Security Taxes Payable and credit
Cash. | | |
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18.
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Both
the employer and the employee are responsible for paying a. | social security
and medicare taxes. | b. | FUTA taxes. | c. | social security,
medicare, and FUTA taxes. | d. | SUTA taxes. | | |
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19.
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Each
employee of a firm will receive several copies of Form W-2, the Wage and Tax
Statement, a. | from the
employer with each paycheck. | b. | from the employer once a year. | c. | from the federal
government once a year. | d. | from the employer once a quarter. | | |
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20.
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Form
941 is filed a. | monthly. | c. | annually. | b. | quarterly. | d. | each payroll period. | | | | |
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21.
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Employers usually record unemployment taxes a. | at the end of
each payroll. | c. | at the end of
each quarter. | b. | at the end of each month. | d. | at the end of each year. | | | | |
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22.
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The
entry to record the payment of SUTA tax would include a. | a debit to State
Unemployment Tax Payable and a credit to Payroll Tax Expense. | b. | a debit to
Payroll Taxes Expense and a credit to Cash. | c. | a debit to
Payroll Taxes Expense and a credit to State Unemployment Tax Payable. | d. | a debit to State
Unemployment Tax Payable and a credit to Cash. | | |
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23.
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If at
the end of the year the firm owes a balance for workers' compensation insurance, the adjusting entry
includes a. | a. debit to
Workers' Compensation Insurance Payable. | b. | a debit to Workers' Compensation Refund
Receivable. | c. | a debit to Workers' Compensation Insurance
Expense. | d. | a debit to Payroll Tax Expense. | | |
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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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24.
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Arnold Armstrong had cumulative earnings of $6,860 before this week. He worked
40 hours this week and makes $5.50 per hour. What taxable earnings for the employer does
this represent for unemployment taxes?
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25.
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Chris
Cooper had cumulative earnings of $6,740 before this week. He worked 38 hours this week and
makes $5.50 per hour. What taxable earnings for the employer does this represent for
FICA Soc.Sec taxes?
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26.
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Bill
Baker had cumulative earnings of $61,950 before this week. He worked 45.5 hours this week and
makes $18.75 per hour. What total deductions should be taken from his pay?
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27.
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Danny
Dunlop had cumulative earnings of $63,000 before this week. He worked 48 hours this week and
makes $20 per hour. What FICA--Soc.Sec Tax should be deducted from his gross
pay?
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