Accounting Chapter 12

Businesses use payroll records to inform employees of their annual earnings and to prepare payroll reports for the government.

• True

• False

The first task in preparing a payroll is to determine the number of days worked by each employee.

• True

• False

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

• True

• False

The amount of income tax withheld from each employee’s total earnings is determined solely from the number of withholding allowances.

• True

• False

A business is required by law to withhold certain payroll taxes from employee salaries.

• True

• False

Social security tax is paid by both employees and employers.

• True

• False

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

• True

• False

Employee regular earnings are calculated as

• regular hours times regular rate

•  total hours divided by regular rate

• total hours plus overtime rate

• overtime hours minus overtime rate

Each employee name is listed in a payroll register along with

• Employee number

• Marital status

• Withholding allowance

• All of these

The withholding allowances of an employee affect

• Social Security Tax withheld

• Federal Income Tax withheld

• Federal Unemployment Tax owed

• State Unemployment Tax owed