accounting chapter 12 and True & False

Question 1

wage

Answer 1

The amount paid to an employee for every hour worked

Question 2

salary

Answer 2

A fixed annual sum of money divided among equal pay periods

Question 3

Commission

Answer 3

is a method of paying an employee based on the
amount of sales the employee generates.

Question 4

total earnings

Answer 4

The total amount paid by a business for an employee’s work, earned
by a wage, salary, or commission,

Question 5

Total earnings are sometimes referred to as

Answer 5

gross pay, gross wages, or gross earnings.

Question 6

pay period

Answer 6

is the number of days or weeks of work covered
by an employee’s paycheck.

Question 7

payroll

Answer 7

The total amount earned by all employees for a pay
period

Question 8

payroll clerk

Answer 8

The accounting staff position that compiles and
computes payroll data and then prepares, journalizes,
and posts payroll transactions

Question 9

time clock

Answer 9

a device used to record the dates and
times of each employee’s arrivals and departures.

Question 10

payroll taxes

Answer 10

Taxes based on the payroll of a business

Question 11

withholding allowance

Answer 11

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

Question 12

payroll deductions

Answer 12

Any amount withheld from an employee’s gross earnings

Question 13

social security tax

Answer 13

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

Question 14

medicare tax

Answer 14

a federal tax paid for hospital insurance

Question 15

accumulated earnings

Answer 15

the total gross earnings year to date for an employee

Question 16

tax base

Answer 16

the maximum amount of earnings on which a tax is calculated

Question 17

qualified retirement plan

Answer 17

a retirement savings plan approved by the Internal Revenue Service

Question 18

401(k)

Answer 18

a qualified retirement plan sponsored by an employer

Question 19

individual retirement account (IRA)

Answer 19

a qualified retirement plan that provides most individuals with a deferred federal income tax benefit

Question 20

Roth

Answer 20

qualified retirement plan that allows tax-free withdrawals from the account

Question 21

payroll register

Answer 21

summarizes the earnings, deductions, and net pay of all employees for one pay period

Question 22

employee earnings record

Answer 22

A business form used to record details of an employee’s
earnings and deductions

Question 23

voucher check

Answer 23

has a detachable check stub, or
voucher, that contains detailed information about
the cash payment.

Question 24

direct deposit

Answer 24

The payment of an employee’s net pay using electronic funds transfer

Question 25

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

Answer 25

true

Question 26

Today’s time clocks can feed data directly into a company’s computer system.

Answer 26

true

Question 27

Total earnings are sometimes referred to as net pay or net earnings.

Answer 27

false

Question 28

An hourly employee’s total earnings are calculated as regular hours × regular rate, plus overtime hours × overtime rate.

Answer 28

true

Question 29

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

Answer 29

true

Question 30

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

Answer 30

true

Question 31

Federal income tax is one example of a payroll deduction.

Answer 31

true

Question 32

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.

Answer 32

true

Question 33

A single person will have less income tax withheld than a married employee earning the same amount.

Answer 33

false

Question 34

The larger the number of withholding allowances claimed, the larger the amount of income tax withheld.

Answer 34

false

Question 35

An employee can be exempt from having federal income tax withheld under certain conditions.

Answer 35

true

Question 36

Social security tax is only paid by the employer.

Answer 36

false

Question 37

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

Answer 37

true

Question 38

When an employee’s accumulated earnings exceed the tax base, no more social security tax is deducted.

Answer 38

true

Question 39

Qualified retirement plans are approved by the Internal Revenue Service.

Answer 39

true

Question 40

Employee contributions to a 401(k) reduce the amount of earnings subject to payroll taxes.

Answer 40

true

Question 41

The investment income of a 401(k) account is taxable to the employee in the year earned.

Answer 41

false

Question 42

Taxes on the contributions and investment income of an IRA are deferred until the funds are withdrawn.

Answer 42

true

Question 43

Contributions to a Roth IRA do not provide a current tax benefit.

Answer 43

true

Question 44

The investment income in a Roth IRA is subject to federal income taxes when withdrawn.

Answer 44

false

Question 45

The columns of the employee earnings record consist of the amount columns in a payroll register and an Accumulated Earnings column.

Answer 45

true

Question 46

A check for each employee’s total net pay is written on the general checking account of the business.

Answer 46

false

Question 47

The original voucher check, with the voucher attached, is mailed to the vendor.

Answer 47

true

Question 48

The voucher of a payroll check contains current pay period and year-to-date earnings and deduction information.

Answer 48

true

Question 49

When EFT is used, the employee does not receive an individual check.

Answer 49

true

Question 50

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

Answer 50

4 hours