Chap 6 Exercise Set A

Question 1

Which of the following are employer-only payroll obligations?

Check all that apply:

• Medicare tax
• Social Security tax
• SUTA
• FUTA

Answer 1

-

• SUTA
• FUTA

Question 2

As of 2020, which of the following accurately represents the full FUTA rate and wage base?

Multiple Choice

• Varies by state
• 0.6 percent, $7,000
• 0.6 percent, $137,700
• 6.0 percent, $7,000

Answer 2

6.0 percent, $7,000

Question 3

Davis Reyes is the accounting for Heads Up Hat Corporation. As he prepares the payroll for the semimonthly pay period ending December 15, he notices that some of the year-to-date executives’ salaries have exceeded $200,000. What payroll tax responsibilities does Heads Up Hat Corporation have, especially regarding FICA taxes?

Check all that apply:

• Social Security tax must be deducted from the executives’ pay for those under the cap and matched by the corporation.
• Medicare taxes should be deducted from all employees’ pay and matched by the corporation.
• An additional 0.9 percent Medicare tax must be deducted from the employees’ pay for those over the base and matched by the corporation.
• An additional 0.9 percent Medicare tax must be deducted from the executives’ pay for those over the base, but no corporate match is required.

Answer 3

• Social Security tax must be deducted from the executives’ pay for those under the cap and matched by the corporation.
• Medicare taxes should be deducted from all employees’ pay and matched by the corporation.
• An additional 0.9 percent Medicare tax must be deducted from the executives’ pay for those over the base, but no corporate match is required.

Question 4

Rosa Pierce is a payroll clerk at Hot Tree Hand Tools. She receives written notice from the IRS that the company is a semiweekly schedule depositor. How is the deposit schedule determined?

Multiple Choice

• The number of employees in the company.
• The amount of FUTA taxes paid.
• The payroll frequency used by the company.
• The payroll tax liability during the lookback period.

Answer 4

The payroll tax liability during the lookback period.

Question 5

Which form(s) should be prepared and filed by companies with employees and payroll tax liabilities exceeding $50,000 as of December 31, 20XX?

Check all that apply:

• Form 940
• Form W-4
• Form 941
• Form W-2

Answer 5

• Form 940
• Form W-4
• Form W-2

Question 6

Wade Pools Company made its required tax deposits. However, it filed its second-quarter Form 941 on August 21, after receiving notice from the IRS of the missing form. What is the failure to file penalty?

Multiple Choice

• 15 percent
• 10 percent
• 5 percent
• 2 percent

Answer 6

5 percent

Question 7

Which of the following is true about the cost of employees within a business context?

Check all that apply:

• The cost of providing employee benefits is minimal and of little importance.
• Employees constitute a significant cost of conducting business.
• Costs associated with employees include only salary and limited hiring expenses.
• Hiring employees involves a significant overhead cost.

Answer 7

• Employees constitute a significant cost of conducting business.
• Hiring employees involves a significant overhead cost.

Question 8

Which of the following represents the purpose(s) of the benefit analysis report?

Check all that apply:

• Benchmarking with other companies.
• Identification of opportunities for increasing profitability.
• Billing employees for benefits costs.
• Understanding of employer and employee benefits costs.

Answer 8

• Benchmarking with other companies.
• Identification of opportunities for increasing profitability.
• Understanding of employer and employee benefits costs.

Question 9

Why is it important to prepare the benefit analysis report or the total compensation report?

Check all that apply:

• The reports may be used to accompany benefits billing.
• The reports inform labor planning and employer cost strategies.
• The reports may be used as employee contracts.
• The reports promote employee education about the total value of their salary and benefits.

Answer 9

• The reports inform labor planning and employer cost strategies.
• The reports promote employee education about the total value of their salary and benefits.

Question 10

Which of the following are the characteristics of workers’ compensation?

Check all that apply:

• Private employers are federally mandated to provide workers’ compensation.
• Workers’ compensation is an insurance policy.
• The cost of workers’ compensation represents a labor expense to the business.
• Workers’ compensation is provided to cover employees who are injured or killed while performing work duties.

Answer 10

• Workers’ compensation is an insurance policy.
• The cost of workers’ compensation represents a labor expense to the business.
• Workers’ compensation is provided to cover employees who are injured or killed while performing work duties.