Question 1

Employment Insurance is levied equally on the employee and the employer.

Accepted Answer

Employment Insurance (EI) premiums are typically higher for employers than for employees, with employers usually paying 1.4 times the amount of the employee's premiums in most cases.

Question 2

Federal income taxes are withheld from wages earned, except the withholding stops each year as soon as the employee has earned $34,900.

Accepted Answer

This statement is false. Federal income taxes are withheld from wages earned throughout the year, regardless of the amount earned. The amount withheld may change based on the employee's total earnings and other factors, but there is no specific earnings threshold at which withholding stops.

Question 3

The Employee's Individual Earnings Record serves as a subsidiary ledger to the Payroll Register account in the General Ledger.

Accepted Answer

False

Question 4

An employer incurs a Canada Pension Plan expense equal to the sum of the CPP withheld from the wages of all its employees.

Accepted Answer

An employer is responsible for deducting CPP contributions from their employees' wages and matching those contributions, resulting in an expense for the employer equal to the total CPP withheld from their employees' wages.

Question 5

Overtime premium pay is not subject to income tax deductions.

Accepted Answer

Overtime premium pay is considered taxable income, and therefore subject to income tax deductions.

Question 6

Employment Insurance is withheld from employees' wages at the rate of 1.83% on only the first $100 earned weekly.

Accepted Answer

Employment Insurance is withheld at a rate of 1.58% on insurable earnings up to a maximum of $56,300 for the year 2021.

Question 7

Payroll taxes levied on employers include Canada Pension and Employment Insurance.

Accepted Answer

Payroll taxes in Canada include the Canada Pension Plan (CPP) and Employment Insurance (EI) which employers are required to deduct and remit on behalf of their employees.

Question 8

The amount of federal income tax to be withheld from each employee's wages is determined solely by the amount of wages earned.

Accepted Answer

The amount of federal income tax to be withheld from each employee's wages is determined by several factors including the employee's filing status, number of withholdings claimed, and any additional income or deductions.

Question 9

Canada Pension Plan is levied equally on the employee and the employer.

Accepted Answer

The Canada Pension Plan is funded by both the employee and employer through equal contributions.

Question 10

Employee income taxes are paid solely by employers based on a percentage of total wages earned by the employee.

Accepted Answer

Employee income taxes are paid by the employee themselves through automatic withholding from their paychecks, not solely by the employer.

Question 11

Since federal income taxes withheld from an employee's wages are expenses of the employee, not the employer, they should not be treated as liabilities of the employer.

Accepted Answer

Federal income taxes withheld from an employee's wages are liabilities of the employer because the employer is responsible for remitting these taxes to the government on the employee's behalf. While they may be calculated based on the employee's earnings, it is the employer's responsibility to ensure they are paid.

Question 12

Canada Pension Plan is withheld from wages earned, except the withholding stops each year as soon as the employee has earned the maximum pensionable earnings for that year.

Accepted Answer

This is true. In 2021, the maximum pensionable earnings is $61,600. Once an employee has earned this amount in a year, the employer will stop deducting CPP contributions from their pay.

Question 13

Since payroll taxes are levied on wages actually paid, there is no legal liability for payroll taxes associated with the accrual of wages.

Accepted Answer

Payroll taxes are based on actual wages paid, so there is no legal liability for payroll taxes on wages that have not yet been paid out (i.e. accrued wages).

Question 14

Canada Pension Plan deductions are social security taxes.

Accepted Answer

Canada Pension Plan (CPP) deductions are not considered social security taxes; they are contributions to a specific Canadian retirement and disability benefits program.

Question 15

In accounting for payrolls, the Payroll Register is a book of original entry which is used for journalizing payroll information.

Accepted Answer

The Payroll Register is a detailed record of each payroll transaction, listing each employee's pay, deductions, and net pay for a specific period, but it is not used for journalizing. Journalizing payroll information involves recording the summarized totals from the payroll register into the general journal or a special payroll journal.

Question 16

Employment Insurance is withheld from wages earned, with the withholding to stop in 2018 as soon as the employee has earned $4,500.

Accepted Answer

Employment Insurance (EI) is a program that provides temporary financial assistance to unemployed workers who have lost their job through no fault of their own. EI premiums are deducted from an employee's wages and the amount is matched by their employer. The withholding of EI premiums does not stop in 2018 after the employee has earned $4,500. The amount of EI premiums deducted depends on the employee's earnings and is subject to an annual maximum.

Question 17

The same form is used to report both Canada Pension and employee income taxes withheld.

Accepted Answer

The T4 slip is used to report both Canada Pension Plan (CPP) contributions and employee income taxes withheld.

Question 18

The same form is used to report both the employer share of payroll taxes and employee income taxes withheld.

Accepted Answer

The Form 941 is used to report both the employer share of payroll taxes (such as Social Security and Medicare taxes) and employee income taxes withheld (such as federal income tax).

Question 19

According to law, a T-4 form showing wages earned and taxes withheld must be given each employee within two months after the calendar year-end.

Accepted Answer

This statement is true. According to the Canada Revenue Agency, employers must provide employees with their T4 slips on or before the last day of February following the calendar year to which the slips apply.

Question 20

Employers and employees both must pay Employment Insurance based on a percentage of the employees' total wages, up to a yearly maximum.

Accepted Answer

Both employers and employees are required to pay Employment Insurance premiums based on a percentage of the employee's total wages, up to a yearly maximum.

Quiz 10: Payroll Liabilities