Accounting Ch. 12 Study Guide

The money paid for employee services
salary

The period covered by a salary payment
pay period

The total amount earned by all employees for a pay period
payroll

The total pay due for pay period before deductions
total earnings

Taxes based on the payroll of a business
payroll taxes

A deduction from total earnings for each person legally supported by a taxpayer, including the employee
withholding allowance

A federal tax paid for hospital insurance
Medicare tax

A federal tax paid for old-age, survivors, and disability insurance
social security tax

The maximum amount of earning on which a tax is calculated
tax base

A business form used to record payroll information
payroll register

The total earnings paid to an employee after payroll taxes and other deductions
net pay

A business form used to record details affecting payments made to an employee
employee earning record

How many hours were worked by an employee who arrived at 8:10 a.m. and departed at 12:10 p.m.?
4 hours

How many hours were worked by an employee who arrived at 7:05 a.m. and departed at 6:05 p.m. with one hour off for lunch?
10 hours

Employee regular earning are calculated as _____.
regular hours times regular rate

Social security tax is calculated on _____.
employee earnings up to a maximum paid in a calendar year

A separate payroll checking account is used primarily to _____.
provide additional protection and control payroll payments

True or False:
A business may decide to pay employee salaries every week, every two weeks, twice a month, or once a month.
True

True or False:
Payroll time cards can be used as the basic source of information to prepare a payroll.
True

True or False:
Total earnings are sometimes referred to as net pay or net earnings.
False

True or False:
Employee total earnings are calculated as regular hours X regular rate, plus overtime hours X overtime rate.
True

True or False:
Payroll taxes withheld represent a liability for an employer until payment is made to the government.
True

True or False:
Employers in many states are required to withhold state, city, or country income tax from employee earnings.
True

True or False:
Employers are required to have a current Form W-4, Employee’s Withholding Allowance Certificate, for all employees.
True

True or False:
The among of incomes tax withheld from each employee’s total earnings is determined from the number of withholding allowances and by the employee’s marital status
True

True or False:
A single person will have less income tax withheld than a married employee.
False

True or False:
The larger the number of withholding allowances claimed, the larger the amount of income tax withheld.
False

True or False:
An employee can be exempt from having federal income tax withheld under certain conditions.
True

True or False:
Social security tax is paid by the employer only.
False

True or False:
An act of Congress can change the social security tax base and tax rate at any time.
True

True or False:
When an employee’s earnings exceed the tax base, no more social security tax is deducted.
True

True or False:
All deductions from employee wages are recorded in a payroll register.
True

True or False:
The columns of the employee earnings record consist of the amount columns in a payroll register and an accumulated earnings columns.
True

True or False:
A new earnings record is prepared for each employee each year.
False

True or False:
A check for the total net pay is written and deposited in the payroll checking account.
True

True or False:
When EFT is used, the employee does not receive an individual check.
True

True or False:
Businesses use payroll records to inform employees of their annual earnings and to prepare reports for the government.
True

True or False:
The first task in preparing a payroll is to determine the number of days worked by each employee.
False

True or False:
Total earnings are sometimes referred to as net pay or net earnings.
False

True or False:
Payroll taxes withheld represent a liability for an employer until payment is made.
True

True or False:
The amount of income tax withheld from each employee’s total earnings is determined from the number of withholding allowances and by the employee’s marital status.
True

True or False:
Employee total earnings are calculated as regular hours x regular rate, plus overtime hours x overtime rate.
True

True or False:
A business is required by law to withhold certain payroll taxes from employee salaries.
True

True or False:
The information used to prepare payroll checks is taken from a payroll register.
True

Federal income tax is withheld from employee earnings _____.
in all 50 states

The withholding allowances of an employee affect _____.
federal income tax withheld

Each employee name is listed in a payroll register along with _____.
all of these

The total earnings paid to an employee after payroll taxes and other deductions is recorded in the payroll register’s _____.
Net Pay column

Individual payroll checks are usually written on _____.
a special payroll checking account

A business form used to record details affecting payments made to an employee is _____.
an employee earnings record

The Accumulated Earnings column of the employee earnings record _____.
is the total earnings since the first of the year

The amount on the employee earnings record used to determine if certain payroll taxes apply to an employee’s earnings is _____.
accumulated earnings