Question 1

In general, how are the expenses associated with the payroll accountant's labor allocated in a ﬁrm?

Accepted Answer

The expenses associated with the payroll accountant's labor are generally reported as part of the firm's overhead because they are part of the indirect costs necessary for the firm's operations but not directly attributable to a specific product or service.

Question 2

What is true about the trial balance?

Accepted Answer

The trial balance is a bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals that are equal. A fundamental principle of double-entry bookkeeping is that the total debits must equal the total credits.

Question 3

Which of the following payroll items is included on the Balance Sheet?

Accepted Answer

Federal withholding tax payable is a liability that represents amounts owed to the government and is included on the balance sheet.

Question 4

What effect do payroll entries have on a ﬁrm's accounting system?

Accepted Answer

Payroll entries typically increase a firm's expenses because they represent the cost of labor, which is an expense to the company. This reduces net income and, consequently, owners' equity, but it does not directly increase assets or decrease liabilities upon the recording of the expense itself.

Question 5

Which of the following financial report(s) reflect the effects of debit and credit General Journal entries used in payroll accounting? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

Accepted Answer

The Income Statement reflects payroll expenses, the Trial Balance shows all accounts including payroll-related ones, and the Balance Sheet reflects liabilities and assets affected by payroll entries. The Labor Distribution Report is not a financial report.

Question 6

Enchanted Creations has the following data in its Federal withholding tax payable General Ledger account:

What is the balance of the account as of April 30?

Accepted Answer

The answer of Enchanted Creations has the following data in...

Question 7

Why does company proﬁtability decrease in direct proportion to the payroll expenses?

Accepted Answer

Payroll is considered an expense for a business, not an asset or income. Therefore, as payroll expenses increase, the company's profitability decreases because more money is being spent on salaries, reducing the overall profit.

Question 8

What does the term "billable time" mean as it pertains to payroll accounting?

Accepted Answer

Billable time refers to the hours worked by employees that can be charged to a client or customer, as it directly relates to the services provided to them.

Question 9

How does a debit balance in the wages and salaries expense account affect a ﬁrm's income statement?

Accepted Answer

A debit balance in the wages and salaries expense account increases the total expenses on the income statement, which in turn decreases the net income of the firm.

Question 10

What is a use of a firm's labor trend reports? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

Accepted Answer

Labor trend reports are used internally by managers to understand how employee labor impacts departmental profits (A), predict future labor costs (B), and identify patterns or issues related to seasonal labor (D). They are not typically designed for external stakeholders (C), as their primary purpose is to aid in internal decision-making and operational planning.

Question 11

On October 15, Eco Brewers had a balance of $4,390 in its Social Security tax payable account. It posted an additional $4,390 on its October 31 pay date. Since Eco Brewers is a monthly schedule depositor, what entry should appear on November 15 for the remittance of the month's Social Security taxes?

Accepted Answer

The correct entry for remitting the month's Social Security taxes would be a debit of $8,780, which represents the total amount due ($4,390 from the beginning of the month plus an additional $4,390 posted on the pay date). This debit entry decreases the liability account for Social Security tax payable.

Question 12

What is the primary purpose of a labor report?

Accepted Answer

The primary purpose of a labor report is to designate where labor is used in a firm, helping management understand how labor resources are allocated and identify areas for efficiency improvements or adjustments.

Question 13

Which report contains employer share tax expenses for a period?

Accepted Answer

The income statement includes employer share tax expenses as part of the company's operating expenses, reflecting the costs associated with employment taxes that the employer is responsible for during the period.

Question 14

In what order are accounts presented on the trial balance?

Accepted Answer

The trial balance presents accounts in the same order as they appear in the chart of accounts, which typically follows the order of assets, liabilities, equity, revenues, and expenses.

Question 15

Rushing River Boats has the following data in its Social Security tax payable General Ledger account:

For the entry on January 31, what does the J4 signify?

Accepted Answer

The answer of Rushing River Boats has the following data...

Question 16

Frellies Gym has a credit balance of $31,485.27 in its Wages and Salaries Payable General Ledger account as of August 16. If the pay date is August 16, what transaction should appear in the Wages and Salaries Payable General Ledger account on that date?

Accepted Answer

The correct transaction is to debit the Wages and Salaries Payable account for $31,485.27. This entry reduces the liability, reflecting the payment of wages and salaries owed as of the pay date.

Question 17

As of the June 11 pay date, the General Ledger account for Burling Mills has a balance of $14,289 in its Federal withholding tax payable account. A credit of $16,250 is recorded on the June 25 pay date. What is the balance in the account?

Accepted Answer

The answer of As of the June 11 pay date,...

Question 18

Which of the following payroll items is not reﬂected on the income statement?

Accepted Answer

Federal withholding tax payable is a liability account that represents taxes withheld from employees' wages and is not an expense of the company; therefore, it does not appear on the income statement. The other options (salaries and wages expense, payroll taxes expense, and health insurance expense) are expenses that reduce the company's income and are reflected on the income statement.

Question 19

On which ﬁnancial report will employer-paid portions of health insurance premiums be listed?

Accepted Answer

Employer-paid portions of health insurance premiums are considered an expense for the company and are therefore listed on the income statement. This statement reflects the company's revenues and expenses, including benefits like health insurance premiums paid on behalf of employees.

Question 20

How do accrued, but not paid, wages appear on the balance sheet?

Accepted Answer

Accrued, but not paid, wages are considered liabilities on the balance sheet because they represent an obligation the company owes to its employees for work performed but not yet paid.

Quiz 7: Payroll Project