Question 1

Every state allows employers to make e-payment options as a condition of employment.

Accepted Answer

While many states allow employers to offer e-payment options, not every state allows it to be made a condition of employment. Some states require alternative payment options to be provided, such as paper checks.

Question 2

Service charges that are passed on to the employee by the employer are not part of the disposable earnings subject to garnishment.

Accepted Answer

Service charges passed on to the employee by the employer are considered part of the employee's earnings and thus are included in the calculation of disposable earnings subject to garnishment. Disposable earnings are the employee's earnings after legally required deductions, and since service charges passed on to employees increase their earnings, they are factored into garnishment calculations.

Question 3

An employer will use the payroll register to keep track of an employee's accumulated wages.

Accepted Answer

False

Question 4

A debit to the employees FIT payable account removes the liability for the amount of federal income taxes withheld from employees' wages.

Accepted Answer

A debit entry to an account means that the account is being reduced. Therefore, a debit to the employees FIT payable account would reduce the liability for the amount of federal income taxes withheld from employees' wages.

Question 5

FIT Payable is a liability account used to record employees' withheld federal income tax and also the employer's match of that tax.

Accepted Answer

FIT Payable is a liability account used to record employees' withheld federal income tax, but it does not include the employer's match of that tax. The employer's match is related to Social Security and Medicare taxes, not federal income tax.

Question 6

An employee's marital status and number of withholding allowances never appear on the payroll register.

Accepted Answer

An employee's marital status and number of withholding allowances often appear on the payroll register as they are relevant for determining the amount of federal income tax to withhold from the employee's paycheck.

Question 7

The total of the net amount paid to employees each payday is credited to either the cash account or the salaries payable account.

Accepted Answer

This statement is true as the net amount paid to employees is either directly debited from the cash account or credited to the salaries payable account.

Question 8

The wage and salaries expense account is an operating expense account debited for total net pay each payroll period.

Accepted Answer

The wage and salaries expense account is debited for the gross pay (total earnings before any deductions) each payroll period, not the net pay. Net pay is the amount employees receive after deductions.

Question 9

If wages are paid weekly, postings to the employee's earnings record would be done once a month.

Accepted Answer

If wages are paid weekly, postings to the employee's earnings record would typically be done on a weekly basis, not just once a month.

Question 10

Each payday, the total of net pays that the employer incurs is the wage expense that must be debited.

Accepted Answer

The total of net pays is not the wage expense debited by the employer; rather, the gross wages (total earnings before any deductions) represent the wage expense that is debited. Net pay is the amount after deductions like taxes and benefits, which is paid to employees.

Question 11

Under the provisions of the Consumer Credit Protection Act, an employer can discharge an employee simply because the employee's wage is subject to garnishment for a single indebtedness.

Accepted Answer

The Consumer Credit Protection Act prohibits an employer from discharging an employee simply because their wage is subject to garnishment for a single indebtedness. However, there are certain exceptions to this rule, such as if the employee's wage is subject to multiple garnishments.

Question 12

Deductions from gross pay in the payroll register are reflected on the credit side of the journal entry to record the payroll.

Accepted Answer

Deductions from gross pay are a reduction in the amount of money paid to the employee and therefore reduce the expense recorded in the payroll entry. This reduction in expense is reflected on the credit side of the journal entry.

Question 13

When withheld union dues are turned over to the union by the employer, a journal entry is made debiting the liability account and crediting the cash account.

Accepted Answer

This is correct, as the withheld union dues are a liability for the employer until they are turned over to the union. When the employer turns over the dues to the union, the liability account is debited, indicating that the obligation has been fulfilled, and the cash account is credited, representing the payment made.

Question 14

In order to prepare Forms W-2, an employer would utilize the employee's earnings record.

Accepted Answer

An employer would use the employee's earnings record to prepare Forms W-2, which report an employee's annual wages and taxes withheld for federal and state governments.

Question 15

Under the Consumer Credit Protection Act, disposable earnings are the earnings remaining after any deductions for health insurance.

Accepted Answer

Disposable earnings are the earnings remaining after deductions required by law, such as taxes and Social Security. Deductions for health insurance are not required by law and therefore not included in the calculation of disposable earnings under the Consumer Credit Protection Act.

Question 16

Amounts withheld from employees' wages for health insurance are credited to a liability account.

Accepted Answer

This is because the amounts withheld are funds that the employer is holding on behalf of the employee to pay for their health insurance premiums. Therefore, they represent a liability the employer owes to the employees until the funds are paid to the insurance provider.

Question 17

Companies usually provide a separate column in the payroll register to record the employer's payroll taxes.

Accepted Answer

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Question 18

Tips received by employees in excess of tip credit amount are not included as disposable earnings subject to garnishment

Accepted Answer

According to federal law, employees are entitled to keep all tips they receive in excess of the tip credit amount, and these excess tips are not considered disposable earnings subject to garnishment.

Question 19

Tax withholdings from employees' pays reduce the amount of the debit to Salary Expense in the payroll entry.

Accepted Answer

Tax withholdings from employees' pays do not reduce the amount of the debit to Salary Expense; instead, they create a liability for the amount withheld, which the employer must remit to the appropriate tax authority. The total gross salary is debited to Salary Expense.

Question 20

Once the journal entry for the payroll is complete, the information is posted to the appropriate general ledger accounts.

Accepted Answer

This is because the journal entry records the payroll expenses and liabilities, which then need to be transferred to the corresponding general ledger accounts. This process ensures that the company's financial records accurately reflect the payroll transactions.

Quiz 6: Analyzing and Journalizing Payroll