module 9- payroll (liability)

Question 1

salary

Answer 1

the rate employees are paid

Question 2

wages

Answer 2

are pay detailed at an hourly rate

Question 3

commission

Answer 3

is paid generally as a percentage of sales

Question 4

bonuses

Answer 4

are paid to employees who achieve monthly, quarterly, or yearly goals.

Question 5

benefits

Answer 5

Benefits include health, life and disability insurance, paid vacation and sick time, and retirement accounts.

Question 6

fringe benefit

Answer 6

form of pay for the performance of services
examples:
- health insurance 
-life time insurance
-educational assistance
-cafeteria plans
-use of a companies vehicle

Question 7

gross pay

Answer 7

the amount of money you are promised either hourly, weekly or annually.

Question 8

Federal income tax withheld

Answer 8

fill out W-4 when hired.
This document allows you to claim allowances and a federal filing status for tax purposes. These allowances, along with your gross pay, are used to calculate your federal tax withheld using withholding tables provided to your employer by the federal government. FIT will reduce your gross pay.

Question 9

State income Tax withheld

Answer 9

A different form than the W-4 but the same concept except it applies to the state where you live or are required to file your state income tax return. Not all states have a state income tax. SIT will reduce your gross pay.

Question 10

FICA social security tax

Answer 10

This tax helps fund social security (payments to you by the federal government once you retire) and is calculated as gross pay x 6.2% unless you make OVER $128,400 then you are only responsible to pay 6.2% of $128,400 and nothing more. Social Security Taxes will reduce your gross pay.

Question 11

Medicare Tax

Answer 11

(also referred to as HI: Hospital Insurance): This tax helps fund Medicare and is calculated as gross pay x 1.45%. Everyone must pay the 1.45% of gross pay without limit. Medicare Tax will reduce your gross pay.

Question 12

voluntary deductions

Answer 12

These voluntary deductions include things like medical premiums (the employee portion), 401K: retirement, and savings accounts, charity donations.

Question 13

net pay

Answer 13

This is the amount you will receive after all taxes and voluntary deductions have been taken out of your gross pay. This is your take-home pay, or your net pay.

Question 14

employers contributions (what they must pay)

Answer 14

• social security tax
• Medicare tax
• Federal unemployment tax
• state unemployment tax
• voluntary deductions matching

Question 15

entry for payroll with deductions

Answer 15

as the company you have to reduct all the payments you are required to pay and credit them. when these liabilities are paid, the employe debits each account and credits cash.

Question 16

entry for the deductions

Answer 16

you add up all the government reductions and debit the total; then go one by one of the liabilities(reductions) and credit them.

Question 17

why is accounting for payroll important

Answer 17

1. payrolls often are the largest expense of a company
2. both federal and state goverments require maintaining detailed payroll record.
3. companies must file regular payroll reports with state and federal governments.

Question 18

independent contractors

Answer 18

businesses are not required to withhold anything from independent contractors. instead they have the file the form 1099 with the IRS

Question 19

distinction of independent contractors

Answer 19

1. Behavioral control: Worker decides how, when, or where to do the work; which tools to use; and where to purchase supplies.
2. Financial control: Worker has a significant investment in his or her work, are not reimbursed for expenses, and may incur profit or loss. Pays own income tax and unemployment insurance.
3. Relationship of parties: Worker does not receive benefits. Written contract states worker is an independent contractor.

Question 20

Distinction of employees

Answer 20

1. Behavioral control: The business has the right to direct or control how the person does their work.
2. Financial control: Worker is reimbursed for expenses.
3. Relationship of parties: Worker receives benefits like insurance, a pension, or paid vacation. Written contract states worker is an employee.