Question 1

The total payroll cost to an employer of an employee who has gross earnings of $78,000 is

Accepted Answer

The total payroll cost to an employer is more than the gross earnings of the employee because the employer must also pay for taxes, benefits, and other expenses associated with having an employee. The specific amount will depend on the employer's policies and tax rates.

Question 2

The federal unemployment tax is levied on

Accepted Answer

The federal unemployment tax is levied solely on employers and is not deducted from employees' earnings. This tax, part of the Federal Unemployment Tax Act (FUTA), funds state workforce agencies and unemployment insurance.

Question 3

The date on which an employer must pay Social Security and Medicare taxes is

Accepted Answer

The due date for paying Social Security and Medicare taxes depends on the amount of the taxes owed, as the IRS has different deadlines and requirements based on the tax liability of the employer.

Question 4

Form 941 is a(n)

Accepted Answer

Form 941 is the Employer's Quarterly Federal Tax Return, used by employers to report income taxes (including Social Security and Medicare taxes) withheld from their employees' paychecks and the employer's own portion of Social Security and Medicare taxes.

Question 5

To journalize the payment of Medicare taxes to the IRS, the correct entry would be

Accepted Answer

When paying Medicare taxes to the IRS, Cash is being decreased (credited) and Medicare Tax Payable account is being decreased (debited). Debiting Payroll Taxes Expense would be appropriate if the entry was for recording the expense related to Medicare taxes, rather than the payment itself. Debiting Social Security Payable would be incorrect as it is a separate tax and liability account from Medicare Tax Payable.

Question 6

The employer pays which of the following to the Internal Revenue Service?

Accepted Answer

The employer pays their portion of Social Security and Medicare taxes (commonly referred to as FICA taxes) to the Internal Revenue Service. This tax is withheld from employees' paychecks as well. The other taxes listed (sales taxes and property taxes) are typically paid by individuals or businesses to state or local governments.

Question 7

Employers who have less than $2,500 due in federal income tax withholding and Social Security and Medicare taxes at the end of the quarter should journalize the debt and pay at the end of the

Accepted Answer

The answer of Employers who have less than $2,500 due...

Question 8

Employers who have $100,000 or more due in federal income tax withholding and Social Security and Medicare taxes on any day during the current quarter should journalize the debt and pay at the end of the

Accepted Answer

Employers with $100,000 or more due in federal income tax withholding and Social Security and Medicare taxes on any day during the current quarter are required to deposit the taxes by the next banking day.

Question 9

A key source of information for computing employer payroll taxes is the

Accepted Answer

The payroll register is the best source of information for computing employer payroll taxes as it provides details on employee wages, withholdings, and employer contributions. This information is necessary to accurately calculate taxes such as Social Security, Medicare, and unemployment taxes. The other options (statement of owner's equity, end-of-period balance sheet, employees' check stubs) do not provide sufficient information related to payroll taxes.

Question 10

A self-employment tax is required of an individual who owns his or her own business and makes

Accepted Answer

A self-employment tax is required for individuals who have earned at least $400 or more from their own business or freelance work. This tax is used to cover Social Security and Medicare taxes that would otherwise be paid by an employer and an employee in a traditional employment relationship.

Question 11

To journalize the employer's payroll taxes, we need to credit all of the following accounts EXCEPT

Accepted Answer

We need to credit the liability accounts such as Social Security Tax Payable, Medicare Tax Payable, and FUTA Tax Payable for the employer's payroll taxes. Payroll Taxes Expense is a debit account that is increased when recording the total amount of employer's payroll taxes paid.

Question 12

An Employer Identification Number (EIN) is obtained by the employer from the

Accepted Answer

An Employer Identification Number (EIN) is obtained from the Internal Revenue Service.

Question 13

The rules by which employers must deposit Social Security and Medicare taxes can be found in the

Accepted Answer

The Circular E--Employer's Tax Guide is specifically designed to provide employers with guidance on depositing Social Security and Medicare taxes. It is published by the Internal Revenue Service (IRS) and outlines the rules and regulations employers must follow when depositing these taxes. The other options listed do not specifically address the deposit of Social Security and Medicare taxes.

Question 14

The employer usually pays the entire cost of

Accepted Answer

Workers' Compensation Insurance is typically paid entirely by the employer. FICA taxes are split between the employer and employee, while medical and disability insurance costs may be shared or entirely paid by the employee.

Question 15

A self-employment tax is a contribution to the

Accepted Answer

A self-employment tax is a contribution to the Social Security and Medicare programs. These programs provide benefits such as retirement, disability, and healthcare to eligible individuals.

Question 16

Melissa Taylor has gross earnings of $425 and withholdings of $26.35 for Social Security tax, $6.16 for Medicare tax, and $35 for federal income tax. Her employer pays $26.35 for Social Security tax, $6.16 for Medicare tax, $3 for FUTA tax, and $9 for SUTA tax. The total cost of Melissa to her employer is

Accepted Answer

Melissa's total withholdings are:
$26.35 (Social Security tax) + $6.16 (Medicare tax) + $35 (federal income tax) = $67.51

Melissa's employer's costs are:
$26.35 (Social Security tax) + $6.16 (Medicare tax) + $3 (FUTA tax) + $9 (SUTA tax) = $44.51

Therefore, Melissa's total cost to her employer is:
$425 (gross earnings) + $67.51 (total withholdings) + $44.51 (employer's costs) = $537.02

Rounded to the nearest cent, the answer is $469.51 (C).

Question 17

When all taxes have been paid, the Social Security Tax Payable account will have

Accepted Answer

When all taxes have been paid, the Social Security Tax Payable account will have a zero balance, as there will be no remaining amount owed or to be credited.

Question 18

After estimating its payroll for the year, an employer usually pays workers' compensation insurance

Accepted Answer

Workers' compensation insurance premiums are often paid at the beginning of the year, based on an estimate of the year's payroll. Adjustments may be made later if actual payroll differs from the estimate.

Question 19

Which of the following tax programs often has a merit-rating system to encourage employers to provide regular employment for workers?

Accepted Answer

SUTA (State Unemployment Tax Act) often has a merit-rating system to encourage employers to provide regular employment for workers. This system rewards employers who have lower rates of employee turnover and higher rates of job stability. FICA (Federal Insurance Contributions Act) and FUTA (Federal Unemployment Tax Act) do not have merit-rating systems, while workers' compensation insurance is a separate insurance program that does not specifically address employment stability.

Question 20

The self-employment tax rate is double the rate of

Accepted Answer

The self-employment tax rate includes both Social Security and Medicare taxes, which are each taxed at a rate of 6.2% and 1.45%, respectively. Therefore, the total self-employment tax rate is 15.3%. This is double the rate of Social Security and Medicare taxes for individuals who are employed by someone else, as their employer must pay half of these taxes (7.65%) on their behalf. FUTA and SUTA taxes are employment taxes that do not apply to self-employed individuals. Property taxes are local taxes on real estate and do not relate to self-employment taxes.

Quiz 9: Payroll Accounting: Employer Taxes and Reports