accounting chapter 12 and True & False Flashcards
wage
The amount paid to an employee for every hour worked
salary
A fixed annual sum of money divided among equal pay periods
Commission
is a method of paying an employee based on the
amount of sales the employee generates.
total earnings
The total amount paid by a business for an employee’s work, earned
by a wage, salary, or commission,
Total earnings are sometimes referred to as
gross pay, gross wages, or gross earnings.
pay period
is the number of days or weeks of work covered
by an employee’s paycheck.
payroll
The total amount earned by all employees for a pay
period
payroll clerk
The accounting staff position that compiles and
computes payroll data and then prepares, journalizes,
and posts payroll transactions
time clock
a device used to record the dates and
times of each employee’s arrivals and departures.
payroll taxes
Taxes based on the payroll of a business
withholding allowance
A deduction from total earnings for each person legally
supported by a taxpayer, including the employee,
payroll deductions
Any amount withheld from an employee’s gross earnings
social security tax
A federal tax paid for old-age, survivors, and disability
insurance
medicare tax
a federal tax paid for hospital insurance
accumulated earnings
the total gross earnings year to date for an employee
tax base
the maximum amount of earnings on which a tax is calculated
qualified retirement plan
a retirement savings plan approved by the Internal Revenue Service
401(k)
a qualified retirement plan sponsored by an employer
individual retirement account (IRA)
a qualified retirement plan that provides most individuals with a deferred federal income tax benefit
Roth
qualified retirement plan that allows tax-free withdrawals from the account
payroll register
summarizes the earnings, deductions, and net pay of all employees for one pay period
employee earnings record
A business form used to record details of an employee’s
earnings and deductions
voucher check
has a detachable check stub, or
voucher, that contains detailed information about
the cash payment.
direct deposit
The payment of an employee’s net pay using electronic funds transfer
A business may decide to pay employee salaries every week, every two weeks, twice a month, or once a month.
true
Today’s time clocks can feed data directly into a company’s computer system.
true
Total earnings are sometimes referred to as net pay or net earnings.
false
An hourly employee’s total earnings are calculated as regular hours × regular rate, plus overtime hours × overtime rate.
true
Payroll taxes withheld represent a liability for an employer until payment is made to the government.
true
Employers are required to have a current Form W-4, Employee’s Withholding Allowance Certificate, for all employees.
true
Federal income tax is one example of a payroll deduction.
true
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.
true
A single person will have less income tax withheld than a married employee earning the same amount.
false
The larger the number of withholding allowances claimed, the larger the amount of income tax withheld.
false
An employee can be exempt from having federal income tax withheld under certain conditions.
true
Social security tax is only paid by the employer.
false
An act of Congress can change the social security tax base and tax rate at any time.
true
When an employee’s accumulated earnings exceed the tax base, no more social security tax is deducted.
true
Qualified retirement plans are approved by the Internal Revenue Service.
true
Employee contributions to a 401(k) reduce the amount of earnings subject to payroll taxes.
true
The investment income of a 401(k) account is taxable to the employee in the year earned.
false
Taxes on the contributions and investment income of an IRA are deferred until the funds are withdrawn.
true
Contributions to a Roth IRA do not provide a current tax benefit.
true
The investment income in a Roth IRA is subject to federal income taxes when withdrawn.
false
The columns of the employee earnings record consist of the amount columns in a payroll register and an Accumulated Earnings column.
true
A check for each employee’s total net pay is written on the general checking account of the business.
false
The original voucher check, with the voucher attached, is mailed to the vendor.
true
The voucher of a payroll check contains current pay period and year-to-date earnings and deduction information.
true
When EFT is used, the employee does not receive an individual check.
true
How many hours were worked by an employee who arrived at 8:10 a.m. and departed at 12:10 p.m.?
4 hours
