Test Bank for Payroll Accounting 2015 1st Edition

Landin Schirmer 007782721X 9780077827212

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Chapter 05

Employer Payroll Taxes and Labor Planning

True / False Questions

1. Mandatory employer-paid payroll taxes are known as statutory deductions.

True False

2.
Payroll taxes for which the employer is responsible for paying a percent of employee compensation include FICA taxes, Federa

True False

3. FUTA and SUTA tax rates vary from state to state.

True False

4. A firm’s frequency of tax deposits is determined by payroll tax liability during the lookback period.

True False

5. A firm that had $55,650 in payroll tax liability will be a monthly schedule depositor.

True False

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6.
An employer files Form 941 on either a quarterly basis or when they deposit payroll taxes, whichever is more frequent.

True False

7. Schedule B must accompany the Form 941 for a firm classified as a semiweekly depositor.

True False

8. Form 940 is the report of tax liability for monthly schedule depositors.

True False

9.
Form W-3 is the report of wages issued to independent contractors and is due to the IRS by January 31 of the following year.

True False

10. Employers who inadvertently fail to file quarterly or annual reports may be subject to penalties.

True False

Multiple Choice Questions

11.
What is the term for the employer’s mandatory payroll taxes that the government has written into law?

A.
Mandated taxes

B.
Legislated deductions

C.
Statutory deductions

D.
Legal deductions

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12.
Which of the following items is always the employer’s sole responsibility?

A.
SUTA taxes

B.
FUTA taxes

C.
Federal withholding tax

D.
FICA taxes

13.
On a recent paycheck, Mayim’s taxes were as follows: Federal withholding, $32; Social Security tax, $35.94; Medicare, $8.90; a

A.
$87.34

B.
$55.34

C.
$44.84

D.
$35.94

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14.
Jeremiah is a full-time exempt employee who earns an annual salary of $215,000. What is the employer’s annual FICA tax resp

A.
$10,371.50

B.
$10,506.50

C.
$16,447.50

D.
$16,582.50

15.
Johnny’s Tavern had 16 employees and total annual wages of $376,948 during the previous year. All employees earned more t

A.
$22,616.88

B. $1,589.69
C.
$7,000.00

D.
$672.00

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16.
PCD Inc. operates as a Nevada business. The SUTA wage base for Nevada is $27,400. PCD Inc.’s SUTA tax rate is 4.5%. The

What is PCD Inc.’s SUTA tax liability for the year?

A.
$5,864.85

B.
$4,778.10

C.
$7,037.82

D.
$5,733.72

17.
PCD Inc. operates as a Nevada business. The employees’ annual earnings for the past calendar year are as follows: Annabelle

What is PCD Inc.’s FUTA tax liability for the year?

A.
$28,000

B.
$26,500

C.
$168

D.
$165

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18.
Dena’s Decorations is a South Carolina business that has a SUTA rate of 3.6% and an annual SUTA wage base of $12,000. Th

What are the FUTA and SUTA tax liabilities for Dena’s Decorations?

A.
FUTA $1,686.20; SUTA $168

B.
FUTA $168; SUTA $1,650.24

C.
FUTA $1,686.20; SUTA $531.36

D.
FUTA $531.36; SUTA $2102.58

19.
Concrete Works is a California company with a SUTA tax of 5.2% and a SUTA wage base of $7,000. The employee earnings fo

What are the employer-share taxes for FUTA, SUTA, ETT, and FICA for the year? (ignore worker’s compensation insurance)

A.
$4,859.11

B.
$8,349.23

C.
$5,108.31

D.
$4,835.91

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20.
As of 2014, the IRS mandated that all electronic tax deposits be submitted through:

A. AFTPS.
B. ESTPF.
C.
EPS.

D. EFTPS.

21. The time period that the IRS uses to determine a firm’s payroll tax deposit schedule is called the:

A.
Evaluation period.

B.
Tax lookback.

C.
Lookback period.

D.
Prior year.

22.
Van Buuren Enterprises had payroll tax liability of $42,450 during the lookback period. How frequently will the firm deposit its pa

A.
Monthly

B.
Annually

C.
Semi-weekly

D.
Next Business Day

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23.
What deposit schedule must all new employers follow (unless their payroll tax liability exceeds $100,000 on any pay date)?

A.
Annual

B.
Monthly

C.
Semi-weekly

D.
Next business day

24.
Van Oot’s Bicycles had $19,489 of payroll tax liability during their lookback period. They pay their employees on a semimonthly

A.
On the last day of the current month

B.
By the 10th of the following month

C.
By the 15th of the following month

D.
By the last day of the following month

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25.
Kohlmeier Industries had $87,950 of annual payroll taxes during the lookback period. The firm pays its employees biweekly on

A.
By the end of the current month

B.
Within two weeks of the pay date

C.
By Friday of the current week

D.
By Wednesday of the following week

26.
Hodgdon Industries, a semi-weekly schedule depositor, pays its employees semimonthly on the 1 st and 15th of the month. Per c

A.
Friday, December 19

B.
Monday, December 22

C.
Wednesday, December 17

D.
Tuesday, December 16

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27.
Andreosatos Enterprises has received a letter from the IRS that due to their tax liability of $1,950 during the lookback period, th

A.
Form 940

B.
Form 945

C.
Form 944

D.
Form 941

28.
Lesch & Sons has been and is currently a monthly schedule depositor. During the current year, they experienced an economic

A.
Form 944

B.
Form 943

C.
Form 942

D.
Form 941

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29.
Patalano’s Pros is a semiweekly schedule depositor. Which form(s) must they file to reconcile their payroll taxes?

A.
Forms 940 and 944

B.
Forms 941 and 944

C.
Form 944 and Schedule B

D.
Form 941 and Schedule B

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30
. McBean Farms has the following information on their Form 941:

What amount should be entered in Column 1, Lines 5a and 5c? (Assume that none of the employes had exceeded the
Social Security wage base.)

A.
$16,264.00

B.
$140,328.00

C.
$8,700.34 and $2,034.76, respectively

D.
$156,592

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31.McBean Farms has the following information on their Form 941:

What amount should be entered in Column 2, Lines 5a and 5c? (Assume that none of the
employees had exceeded the Social Security wage base.)

A. $17,400.67 and $4,069.51,

respectively
B. $140,328.00
C. $8,700.34 and $2,034.76,
respectively
D. $156,592

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32.Daigneault Designs has the following amounts listed on their Form 941:

What amounts belong in Column 2, Lines 5a and 5c?

A. $4,169.38 and $1,950.19,

respectively
B. $4,169.28 and $975.19,
respectively
C. $8,338.75 and $1,950.19,
respectively
D. $8,338.75 and $975.19,
respectively

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33.Daigneault Designs has the following amounts listed on their Form 941:

What amount belongs on line 5e?

A. $67,248.00
B. $8,338.75
C. $10,288.94
D. $5,860.00

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34 Daigneault Designs has the following amounts listed on their Form 941:
.

Assuming that Daigneault Designs has no tipped employees, what amount belongs on line 6?

A. $10,288.94
B. $16,148.94
C. $83,396.94
D. $20,577.89

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35 Collin’s Pool Service files a Form 944 to report its payroll tax liability. Line 5 had a total of $2,648.96. Part 2 contained
. the following information:

What amount belongs in box 13m?

A. $2,500.00
B. $1,379.00
C. $2,649.00
D. $2,648.96

36 Collin’s Pool Service files a Form 944 to report its payroll tax liability. Line 5 had a total of $2,648.96. Line 13m in Part 2
. reported wages of $2,649.00. What needs to be done to reconcile the two amounts?

A.
$0.04 needs to be added via line 6 for the current year’s adjustments.

B.
$0.04 needs to be subtracted via line 6 for the current year’s adjustments.

C.
Nothing needs to be done because both totals are correctly computed.

D.
Change line 5 to match line 13m.

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37.Red’s Waterworks is a semiweekly depositor. One month of the recent quarter’s Schedule B had the following
information:

What is Red Waterworks’ tax liability for Month 1?

A. $29,811.87
B. $42,116.29
C. $56,484.81
D. $39,138.14

38 Cralic Company has 12 employees and operates in Texas. The Form 940 for the previous year contained the following
. information:

What amount should be entered on line 5? (Assume that all employees had exceeded the FUTA wage base.)

A. $84,000
B. $1,535.91
C. $171,984.29
D. $1,031.91

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39 Cralic Company has 12 employees and operates in Texas. The Form 940 for the previous year contained the following
. information:

What amount should be entered on line 7?

A. $84,000
B. $1,535.91
C. $171,984.29
D. $1,031.91

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40 Cralic Company has 12 employees and operates in Texas. The Form 940 for the previous year contained the following
. information:

What amount should be entered on line 8?

A. $504.00
B. $1,008.00
C. $1,535.91
D. $1,031.91

41.Which copy of Form W-2 should be retained by the employee?

A. Copy
1
B. Copy
D
C. Copy
3
D. Copy
C

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42 Annabelle is employed as an administrator for GRM Industries. She noticed that her Box 1 and Box 3 amounts on her W-2
. were different.

What is a reason why the amounts in boxes 1 and 3 would be different?

A.
Annabelle received tips, which are not subject to Social Security taxes.

B. Annabelle has contributed to a pre-tax 401(k) that reduced her taxable wages.
C. Annabelle changed her withholding allowances on her W-4.
D. Annabelle’s wages were subject to a pre-tax garnishment.

43 Faith, the accountant for Harris’s Meats, filed Form 941 for the first quarter on May 12. The amount of taxes due to be
. paid with Form 941 was $8,975. What is the amount that must be remitted, including the IRS penalty for the failure to file?

A. $8,975.00
B. $9,154.50
C. $9,423.75
D. $9,872.50

44 Which of the following is not an example of an employer’s payroll-related business expense?

.

A. Tax deposits and filings

B. Voluntary deduction reception
C. Tax withholding and matching
D. Employee compensation and accountability

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45.
The number of employees contained in the different departments of a company is known as the:

A.
Employee concentration.

B.
Department classification.

C.
Labor distribution.

D.
Company division.

46.
Trick’s Costumes has 65 employees, who are distributed as follows:

Design 12 employees
Fabrication 30 employees
Purchasing 8 employees
Administration 10 employees
Sales 5 employees

The payroll-related costs for the year are $1,043,050. If Trick’s Costumes does not use departmental classification, how much is

A.
$153,910

B.
$202,850

C.
$208,610

D.
$260,763

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47. Trick’s Costumes has 65 employees, who are distributed as follows:

Design 12 employees
Fabrication 30 employees
Purchasing 8 employees
Administration 10 employees
Sales 5 employees

The payroll-related costs for the year are $1,043,050. If Trick’s Costumes does use departmental classification, how much is all

A.
$208,210.50

B.
$192,563.08

C.
$128,375.38

D.
$160,469.23

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48. Trick’s Costumes has 65 employees, who are distributed as follows:
Design 12 employees
Fabrication 30 employees
Purchasing 8 employees
Administration 10 employees
Sales 5 employees

The payroll-related costs for the year are $1,043,050. If Trick’s Costumes does use departmental classification, how much is all

A.
$563,190.56

B.
$401,173.10

C.
$433,266.92

D.
$481,407.69

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49. Trick’s Costumes has 65 employees, who are distributed as follows:

Design 12 employees
Fabrication 30 employees
Purchasing 8 employees
Administration 10 employees
Sales 5 employees

The payroll-related costs for the year are $1,043,050. If Trick’s Costumes does use departmental classification, how much is all

A.
$128,375.38

B.
$160,469.23

C.
$176,516.15

D.
$120,351.92

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50. Trick’s Costumes has 65 employees, who are distributed as follows:

Design 12 employees
Fabrication 30 employees
Purchasing 8 employees
Administration 10 employees
Sales 5 employees

The payroll-related costs for the year are $1,043,050. If Trick’s Costumes does use departmental classification, how much is all

A.
$192,563.08

B.
$240,703.85

C.
$208,610.00

D.
$160,469.23

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51. Trick’s Costumes has 65 employees, who are distributed as follows:

Design 12 employees
Fabrication 30 employees
Purchasing 8 employees
Administration 10 employees
Sales 5 employees

The payroll-related costs for the year are $1,043,050. If Trick’s Costumes does use departmental classification, how much is all

A.
$101,429.78

B.
$80,234.62

C.
$64,187.69

D.
$96,281.54

52. Which of the following best describes the function of a benefit analysis report?

A.
It is an analysis of the benefits paid to employees.

B.
It is an analysis of each employee’s benefit package.

C.
It is an analysis of the effect of labor costs on departmental profitability.

D.
It is an analysis of each department’s benefit to the company.

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53.
What factor is not included in an employee’s total compensation report?

A.
Federal withholding tax deductions

B.
Paid time off like sick and vacation time

C.
Health and worker’s compensation insurance premiums

D.
Bonuses and other incentive programs

54.
Leah works for Toffolon Technicians in New Hampshire, where she earns $30,000 annually. She contributes 3% to her 401(k),
additional 15% of Leah’s annual salary. What is Leah’s total annual compensation?

A.
$30,000

B.
$34,445

C.
$38,250

D.
$31,467

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55.
John works for Heinlein Hillclimbers in Wyoming, where he earns $26,500 annually. He contributes $150 per month to his 401(k
$5,250 in tuition reimbursement. Heinlein pays employer-only taxes and insurance that comprise an additional 18% of John’s a

A.
$26,500.00

B.
$39,675.25

C.
$40,710.00

D.
$39,633.25

56.
Maeisha works for Brown Corporation, where she earns $45,000. Her employer contributes 1% of her pay to her pension fund a
an additional 12% of Maiesha’s annual salary. What is Maeisha’s total annual compensation?

A.
$56,230.00

B.
$54,849.30

C.
$50,766.80

D.
$54,451.30

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57.
Cordelia is an employee of Snaktyme Foods in Missouri. She earns $24,000 annually. Snaktyme has provided uniforms worth
employer-only taxes and insurance that comprises an additional 14% of Cordelia’s annual salary. What is Cordelia’s total annua

A.
$28,000

B.
$31,500

C.
$29,260

D.
$29,900

58. From which source is the annual compensation report data not gathered?

A.
Employee earnings report

B.
Vendor invoices

C.
Payroll tax reports

D.
Employee questionnaires

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59. Which of the following tasks would not use the information from the Benefit Analysis Report?

A.
Budgeting

B.
Benchmarking

C.
Departmental Reporting

D.
Labor Planning

60. What is a potential consequence when a manager does not review a benefit analysis report?

A.
Incorrect departmental labor distribution

B.
Awareness of employee-related costs

C.
Increased departmental profitability

D.
Well-designed budgets

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61.
Francesca earns $2,400 per pay period. Compute the FICA taxes for both employee and employer share. What is the total FICA

A.
$297.60

B.
$332.40

C.
$218.40

D.
$367.20

62.
Jamie earns $232,000 annually. Compute the FICA taxes for both the employee and employer share. The Social Security wage

A.
$21,524

B.
$14,270

C.
$18,160

D.
$17,872

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63.
Anadama Painters has 15 employees and is located in South Dakota. The total wages for the last year was $389,458. What wa

A.
$608

B.
$645

C.
$630

D.
$620

64.
Deschutes Companies located in Oregon has a SUTA tax rate of 4.10% and a wage base of $35,000. During the last calendar

A.
$16,247

B.
$16,709

C.
$15,323

D.
$15,785

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65 The payroll-related taxes that an employer must pay are known as _______________________.
.

A.
Mandatory taxes

B.
Statutory deductions

C.
FICA taxes

D.
FUTA taxes

66 The payroll tax(es) for which an employer must match the entire amount of the employee’s deduction include
. _______________________.

A.
FICA and Federal withholding tax.

B.
FUTA and SUTA.

C.
Social Security and Medicare (up to $117,000 and $200,000 in annual compensation
respectively).

D.
Federal withholding tax.

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67 The IRS uses the ___________________________ to determine how often a company must deposit payroll taxes.
.

A.
Previous year’s payroll tax deposits

B.
Firm’s income tax filings

C.
Lookback period

D.
Financial statements

68 The form that employers use to report their quarterly Federal income tax liability is _________________.
.

A.
Form 940

B.
Form 944

C.
Form 943

D.
Form 941

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69
. The total of a firm’s annual wages and salaries must match on Forms _________________.

A.
W-2 and W-3

B.
940 and W-2

C.
W-3 and 941

D.
941 and W-2

70
. If an employer fails to make payroll tax deposits on time, the firm will be penalized if the IRS finds evidence of
_____________________________.

A.
Willful disregard

B.
Inadvertent negligence

C.
Incompetent reporting

D.
Mistaken analysis

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71.Employee expenses like benefits and other non-wage compensation may amount to at least another _______________ of each
pay.

A.
40%

B.
60%

C.
70%

D.
50%

72
. _________________________ allows firms to allocate costs accurately among departments.

A.
Labor costing

B.
Labor distribution

C.
Compensation analysis

D.
Benefit analysis

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73
.
A benefit analysis report may be compiled to reveal _________________________.

A.
Department profitability

B.
Employee productivity

C.
Labor distribution

D.
Departmental effectiveness

74. A(n) _________________ reflects the total of salary/wages, bonuses, benefits, and employer paid costs in
an employee’s pay.

A.
Financial position report

B.
Employee analysis report

C.
Form EM-42

D.
Total compensation report

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 Chapter 05 Employer Payroll Taxes and Labor Planning Answer Key

True / False Questions

1. Mandatory employer-paid payroll taxes are known as statutory deductions.

TRUE

AACSB: Communication
AICPA: BB Legal
AICPA: FN Research
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Employer-Paid and Employee-Paid Obligations
Topic: Employer-Paid and Employee-Paid Obligations

2.
Payroll taxes for which the employer is responsible for paying a percent of employee compensation include FICA taxes, Fed

FALSE

AACSB: Communication
AICPA: BB Industry
AICPA: FN Research
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-01 Employer-Paid and Employee-Paid Obligations
Topic: Employer-Paid and Employee-Paid Obligations

3. FUTA and SUTA tax rates vary from state to state.

FALSE

AACSB: Communication
AICPA: BB Industry
AICPA: FN Research
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-01 Employer-Paid and Employee-Paid Obligations
Topic: Employer-Paid and Employee-Paid Obligations

4. A firm’s frequency of tax deposits is determined by payroll tax liability during the lookback period.

TRUE

AACSB: Communication
AICPA: BB Industry
AICPA: FN Measurement
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-02 Reporting Periods and Requirements for Employer Tax Deposits
Topic: Reporting Periods and Requirements for Employer Tax Deposits

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5. A firm that had $55,650 in payroll tax liability will be a monthly schedule depositor.

FALSE

AACSB: Communication
AICPA: BB Industry
AICPA: FN Measurement
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-02 Reporting Periods and Requirements for Employer Tax Deposits
Topic: Reporting Periods and Requirements for Employer Tax Deposits

6.
An employer files Form 941 on either a quarterly basis or when they deposit payroll taxes, whichever is more frequent.

FALSE

AACSB: Reflective Thinking

AICPA: BB Legal
AICPA: FN Decision Making
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-03 Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Mid-Year and Year-End Employer Tax Reporting and Deposits

7. Schedule B must accompany the Form 941 for a firm classified as a semiweekly depositor.

TRUE

AACSB: Communication
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-03 Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Mid-Year and Year-End Employer Tax Reporting and Deposits

8. Form 940 is the report of tax liability for monthly schedule depositors.

FALSE

AACSB: Reflective Thinking

AICPA: BB Legal
AICPA: FN Reporting
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-03 Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Mid-Year and Year-End Employer Tax Reporting and Deposits

5-40
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
9.
Form W-3 is the report of wages issued to independent contractors and is due to the IRS by January 31 of the following yea

FALSE

AACSB: Communication
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-03 Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Mid-Year and Year-End Employer Tax Reporting and Deposits

10. Employers who inadvertently fail to file quarterly or annual reports may be subject to penalties.

TRUE

AACSB: Communication
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-04 Payroll as a Business Expense
Topic: Payroll as a Business Expense

Multiple Choice Questions

5-41
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11.
What is the term for the employer’s mandatory payroll taxes that the government has written into law?

A.
Mandated taxes

B.
Legislated deductions

C.
Statutory deductions

D.
Legal deductions

AACSB: Communication
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-01 Employer-Paid and Employee-Paid Obligations
Topic: Employer-Paid and Employee-Paid Obligations

12.
Which of the following items is always the employer’s sole responsibility?

A.
SUTA taxes

B.
FUTA taxes

C.
Federal withholding tax

D.
FICA taxes

AACSB: Reflective Thinking

AICPA: BB Industry
AICPA: FN Research
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-01 Employer-Paid and Employee-Paid Obligations
Topic: Employer-Paid and Employee-Paid Obligations

5-42
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13.
On a recent paycheck, Mayim’s taxes were as follows: Federal withholding, $32; Social Security tax, $35.94; Medicare, $8.9

A.
$87.34

B.
$55.34

C.
$44.84

D.
$35.94

AACSB: Analytic
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 05-01 Employer-Paid and Employee-Paid Obligations
Topic: Employer-Paid and Employee-Paid Obligations

5-43
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14.
Jeremiah is a full-time exempt employee who earns an annual salary of $215,000. What is the employer’s annual FICA tax r

A.
$10,371.50

B.
$10,506.50

C.
$16,447.50

D.
$16,582.50

AACSB: Analytic
AICPA: BB Critical Thinking
AICPA: FN Reporting
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 05-01 Employer-Paid and Employee-Paid Obligations
Topic: Employer-Paid and Employee-Paid Obligations

15.
Johnny’s Tavern had 16 employees and total annual wages of $376,948 during the previous year. All employees earned mo

A.
$22,616.88

B. $1,589.69
C.
$7,000.00

D.
$672.00

AACSB: Analytic
AICPA: BB Resource Management
AICPA: FN Reporting
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-01 Employer-Paid and Employee-Paid Obligations
Topic: Employer-Paid and Employee-Paid Obligations

5-44
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McGraw-Hill Education.
16.
PCD Inc. operates as a Nevada business. The SUTA wage base for Nevada is $27,400. PCD Inc.’s SUTA tax rate is 4.5%.

What is PCD Inc.’s SUTA tax liability for the year?

A.
$5,864.85

B.
$4,778.10

C.
$7,037.82

D.
$5,733.72

AACSB: Analytic
AICPA: BB Critical Thinking
AICPA: FN Measurement
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-01 Employer-Paid and Employee-Paid Obligations
Topic: Employer-Paid and Employee-Paid Obligations

5-45
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McGraw-Hill Education.
17.
PCD Inc. operates as a Nevada business. The employees’ annual earnings for the past calendar year are as follows: Annab

What is PCD Inc.’s FUTA tax liability for the year?

A.
$28,000

B.
$26,500

C.
$168

D.
$165

AACSB: Analytic
AICPA: BB Critical Thinking
AICPA: FN Reporting
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-01 Employer-Paid and Employee-Paid Obligations
Topic: Employer-Paid and Employee-Paid Obligations

5-46
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McGraw-Hill Education.
18.
Dena’s Decorations is a South Carolina business that has a SUTA rate of 3.6% and an annual SUTA wage base of $12,000

What are the FUTA and SUTA tax liabilities for Dena’s Decorations?

A.
FUTA $1,686.20; SUTA $168

B.
FUTA $168; SUTA $1,650.24

C.
FUTA $1,686.20; SUTA $531.36

D.
FUTA $531.36; SUTA $2102.58

AACSB: Analytic
AICPA: BB Critical Thinking
AICPA: FN Measurement
Blooms: Evaluate
Difficulty: 3 Hard
Learning Objective: 05-01 Employer-Paid and Employee-Paid Obligations
Topic: Employer-Paid and Employee-Paid Obligations

5-47
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19.
Concrete Works is a California company with a SUTA tax of 5.2% and a SUTA wage base of $7,000. The employee earning

What are the employer-share taxes for FUTA, SUTA, ETT, and FICA for the year? (ignore worker’s compensation insurance

A.
$4,859.11

B.
$8,349.23

C.
$5,108.31

D.
$4,835.91

AACSB: Analytic
AICPA: BB Critical Thinking
AICPA: FN Measurement
Blooms: Evaluate
Difficulty: 3 Hard
Learning Objective: 05-01 Employer-Paid and Employee-Paid Obligations
Topic: Employer-Paid and Employee-Paid Obligations

20.
As of 2014, the IRS mandated that all electronic tax deposits be submitted through:

A. AFTPS.
B. ESTPF.
C.
EPS.

D. EFTPS.

AACSB: Reflective Thinking

AICPA: BB Industry
AICPA: FN Reporting
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-02 Reporting Periods and Requirements for Employer Tax Deposits
Topic: Reporting Periods and Requirements for Employer Tax Deposits

5-48
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21. The time period that the IRS uses to determine a firm’s payroll tax deposit schedule is called the:

A.
Evaluation period.

B.
Tax lookback.

C.
Lookback period.

D.
Prior year.

AACSB: Reflective Thinking

AICPA: BB Industry
AICPA: FN Measurement
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-02 Reporting Periods and Requirements for Employer Tax Deposits
Topic: Reporting Periods and Requirements for Employer Tax Deposits

22.
Van Buuren Enterprises had payroll tax liability of $42,450 during the lookback period. How frequently will the firm deposit its

A.
Monthly

B.
Annually

C.
Semi-weekly

D.
Next Business Day

AACSB: Analytic
AICPA: BB Industry
AICPA: FN Reporting
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 05-02 Reporting Periods and Requirements for Employer Tax Deposits
Topic: Reporting Periods and Requirements for Employer Tax Deposits

5-49
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McGraw-Hill Education.
23.
What deposit schedule must all new employers follow (unless their payroll tax liability exceeds $100,000 on any pay date)?

A.
Annual

B.
Monthly

C.
Semi-weekly

D.
Next business day

AACSB: Reflective Thinking

AICPA: BB Industry
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-02 Reporting Periods and Requirements for Employer Tax Deposits
Topic: Reporting Periods and Requirements for Employer Tax Deposits

24.
Van Oot’s Bicycles had $19,489 of payroll tax liability during their lookback period. They pay their employees on a semimon

A.
On the last day of the current month

B.
By the 10th of the following month

C.
By the 15th of the following month

D.
By the last day of the following month

AACSB: Communication
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 05-02 Reporting Periods and Requirements for Employer Tax Deposits
Topic: Reporting Periods and Requirements for Employer Tax Deposits

5-50
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McGraw-Hill Education.
25.
Kohlmeier Industries had $87,950 of annual payroll taxes during the lookback period. The firm pays its employees biweekly

A.
By the end of the current month

B.
Within two weeks of the pay date

C.
By Friday of the current week

D.
By Wednesday of the following week

AACSB: Communication
AICPA: BB Industry
AICPA: FN Reporting
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 05-02 Reporting Periods and Requirements for Employer Tax Deposits
Topic: Reporting Periods and Requirements for Employer Tax Deposits

26.
Hodgdon Industries, a semi-weekly schedule depositor, pays its employees semimonthly on the 1 st and 15th of the month. P

A.
Friday, December 19

B.
Monday, December 22

C.
Wednesday, December 17

D.
Tuesday, December 16

AACSB: Communication
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-02 Reporting Periods and Requirements for Employer Tax Deposits
Topic: Reporting Periods and Requirements for Employer Tax Deposits

5-51
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McGraw-Hill Education.
27.
Andreosatos Enterprises has received a letter from the IRS that due to their tax liability of $1,950 during the lookback period

A.
Form 940

B.
Form 945

C.
Form 944

D.
Form 941

AACSB: Communication
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 05-02 Reporting Periods and Requirements for Employer Tax Deposits
Learning Objective: 05-03 Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Reporting Periods and Requirements for Employer Tax Deposits

28.
Lesch & Sons has been and is currently a monthly schedule depositor. During the current year, they experienced an econom

A.
Form 944

B.
Form 943

C.
Form 942

D.
Form 941

AACSB: Communication
AICPA: BB Critical Thinking
AICPA: FN Reporting
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-02 Reporting Periods and Requirements for Employer Tax Deposits
Topic: Reporting Periods and Requirements for Employer Tax Deposits

5-52
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McGraw-Hill Education.
29.
Patalano’s Pros is a semiweekly schedule depositor. Which form(s) must they file to reconcile their payroll taxes?

A.
Forms 940 and 944

B.
Forms 941 and 944

C.
Form 944 and Schedule B

D.
Form 941 and Schedule B

AACSB: Communication
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-03 Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Reporting Periods and Requirements for Employer Tax Deposits

5-53
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
30
. McBean Farms has the following information on their Form 941:

What amount should be entered in Column 1, Lines 5a and 5c? (Assume that none of the employes had exceeded the Social
Security wage base.)

A.
$16,264.00

B.
$140,328.00

C.
$8,700.34 and $2,034.76, respectively

D.
$156,592

AACSB: Reflective Thinking

AICPA: BB Industry
AICPA: FN Reporting
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 05-03 Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Mid-Year and Year-End Employer Tax Reporting and Deposits

5-54
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McGraw-Hill Education.
31 McBean Farms has the following information on their Form 941:
.

What amount should be entered in Column 2, Lines 5a and 5c? (Assume that none of the employees had exceeded the
Social Security wage base.)

A. $17,400.67 and $4,069.51, respectively

B. $140,328.00
C. $8,700.34 and $2,034.76, respectively
D. $156,592

AACSB: Communication
AICPA: BB Industry
AICPA: FN Reporting
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 05-03 Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Mid-Year and Year-End Employer Tax Reporting and Deposits

5-55
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McGraw-Hill Education.
32
. Daigneault Designs has the following amounts listed on their Form 941:

What amounts belong in Column 2, Lines 5a and 5c?

A. $4,169.38 and $1,950.19, respectively

B. $4,169.28 and $975.19, respectively
C. $8,338.75 and $1,950.19, respectively
D. $8,338.75 and $975.19, respectively

AACSB: Communication
AICPA: BB Industry
AICPA: FN Reporting
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-03 Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Mid-Year and Year-End Employer Tax Reporting and Deposits

5-56
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McGraw-Hill Education.
33.Daigneault Designs has the following amounts listed on their Form 941:

What amount belongs on line 5e?

A. $67,248.00
B. $8,338.75
C. $10,288.94
D. $5,860.00

AACSB: Analytic
AICPA: BB Industry
AICPA: FN Reporting
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 05-03 Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Mid-Year and Year-End Employer Tax Reporting and Deposits

5-57
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McGraw-Hill Education.
34
. Daigneault Designs has the following amounts listed on their Form 941:

Assuming that Daigneault Designs has no tipped employees, what amount belongs on line 6?

A. $10,288.94
B. $16,148.94
C. $83,396.94
D. $20,577.89

AACSB: Analytic
AICPA: BB Industry
AICPA: FN Reporting
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 05-03 Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Mid-Year and Year-End Employer Tax Reporting and Deposits

5-58
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McGraw-Hill Education.
35 Collin’s Pool Service files a Form 944 to report its payroll tax liability. Line 5 had a total of $2,648.96. Part 2 contained the
. following information:

What amount belongs in box 13m?

A. $2,500.00
B. $1,379.00
C. $2,649.00
D. $2,648.96

AACSB: Analytic
AICPA: BB Industry
AICPA: FN Reporting
Blooms: Evaluate
Difficulty: 3 Hard
Learning Objective: 05-03 Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Mid-Year and Year-End Employer Tax Reporting and Deposits

5-59
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
36
. Collin’s Pool Service files a Form 944 to report its payroll tax liability. Line 5 had a total of $2,648.96. Line 13m in Part 2
reported wages of $2,649.00. What needs to be done to reconcile the two amounts?

A.
$0.04 needs to be added via line 6 for the current year’s adjustments.

B.
$0.04 needs to be subtracted via line 6 for the current year’s adjustments.

C.
Nothing needs to be done because both totals are correctly computed.

D.
Change line 5 to match line 13m.

AACSB: Analytic
AICPA: BB Critical Thinking
AICPA: FN Reporting
Blooms: Evaluate
Difficulty: 3 Hard
Learning Objective: 05-03 Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Mid-Year and Year-End Employer Tax Reporting and Deposits

5-60
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37 Red’s Waterworks is a semiweekly depositor. One month of the recent quarter’s Schedule B had the following
. information:

What is Red Waterworks’ tax liability for Month 1?

A. $29,811.87
B. $42,116.29
C. $56,484.81
D. $39,138.14

AACSB: Analytic
AICPA: BB Industry
AICPA: FN Reporting
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 05-03 Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Mid-Year and Year-End Employer Tax Reporting and Deposits

5-61
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McGraw-Hill Education.
38 Cralic Company has 12 employees and operates in Texas. The Form 940 for the previous year
. contained the following information:

What amount should be entered on line 5? (Assume that all employees had exceeded the FUTA wage base.)

A. $84,0
00
B. $1,535.
91
C. $171,984.
29
D. $1,031.
91

AACSB: Analytic
AICPA: BB Industry
AICPA: FN Reporting
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 05-03 Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Mid-Year and Year-End Employer Tax Reporting and Deposits

5-62
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McGraw-Hill Education.
39 Cralic Company has 12 employees and operates in Texas. The Form 940 for the previous year contained the following
. information:

What amount should be entered on line 7?

A. $84,000
B. $1,535.91
C. $171,984.29
D. $1,031.91

AACSB: Analytic
AICPA: BB Industry
AICPA: FN Reporting
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-03 Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Mid-Year and Year-End Employer Tax Reporting and Deposits

5-63
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McGraw-Hill Education.
40 Cralic Company has 12 employees and operates in Texas. The Form 940 for the previous year contained the following
. information:

What amount should be entered on line 8?

A. $504.00
B. $1,008.00
C. $1,535.91
D. $1,031.91

AACSB: Analytic
AICPA: BB Industry
AICPA: FN Reporting
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-03 Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Mid-Year and Year-End Employer Tax Reporting and Deposits

4 Which copy of Form W-2 should be retained by the employee?

1.

A. Copy 1
B. Copy D
C. Copy 3
D. Copy C

AACSB: Reflective Thinking

AICPA: BB Industry
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-03 Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Mid-Year and Year-End Employer Tax Reporting and Deposits

5-64
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McGraw-Hill Education.
42 Annabelle is employed as an administrator for GRM Industries. She noticed that her Box 1 and Box 3 amounts on her W-
. 2 were different.

What is a reason why the amounts in boxes 1 and 3 would be different?

A.
Annabelle received tips, which are not subject to Social Security taxes.

B. Annabelle has contributed to a pre-tax 401(k) that reduced her taxable wages.
C. Annabelle changed her withholding allowances on her W-4.
D. Annabelle’s wages were subject to a pre-tax garnishment.

AACSB: Reflective Thinking

AICPA: BB Critical Thinking
AICPA: FN Reporting
Blooms: Evaluate
Difficulty: 3 Hard
Learning Objective: 05-03 Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Mid-Year and Year-End Employer Tax Reporting and Deposits

43 Faith, the accountant for Harris’s Meats, filed Form 941 for the first quarter on May 12. The amount of taxes due
. to be paid with Form 941 was $8,975. What is the amount that must be remitted, including the IRS penalty for the
failure to file?

A. $8,975.00
B. $9,154.50
C. $9,423.75
D. $9,872.50

AACSB: Analytic
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-04 Payroll as a Business Expense
Topic: Payroll as a Business Expense

5-65
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44.Which of the following is not an example of an employer’s payroll-related business expense?

A. Tax deposits and

filings
B. Voluntary deduction
reception
C. Tax withholding and
matching
D. Employee compensation and
accountability

AACSB: Reflective Thinking

AICPA: BB Industry
AICPA: FN Decision Making
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-04 Payroll as a Business Expense
Topic: Payroll as a Business Expense

45.
The number of employees contained in the different departments of a company is known as the:

A.
Employee concentration.

B.
Department classification.

C.
Labor distribution.

D.
Company division.

AACSB: Reflective Thinking

AICPA: BB Resource Management
AICPA: FN Measurement
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-05 Labor Expenses and Company Profitability
Topic: Labor Expenses and Company Profitability

5-66
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McGraw-Hill Education.
46.
Trick’s Costumes has 65 employees, who are distributed as follows:

Design 12 employees
Fabrication 30 employees
Purchasing 8 employees
Administration 10 employees
Sales 5 employees

The payroll-related costs for the year are $1,043,050. If Trick’s Costumes does not use departmental classification, how muc

A.
$153,910

B.
$202,850

C.
$208,610

D.
$260,763

AACSB: Analytic
AICPA: BB Resource Management
AICPA: FN Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 05-05 Labor Expenses and Company Profitability
Topic: Labor Expenses and Company Profitability

5-67
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47. Trick’s Costumes has 65 employees, who are distributed as follows:

Design 12 employees
Fabrication 30 employees
Purchasing 8 employees
Administration 10 employees
Sales 5 employees

The payroll-related costs for the year are $1,043,050. If Trick’s Costumes does use departmental classification, how much is

A.
$208,210.50

B.
$192,563.08

C.
$128,375.38

D.
$160,469.23

AACSB: Analytic
AICPA: BB Resource Management
AICPA: FN Measurement
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-05 Labor Expenses and Company Profitability
Topic: Labor Expenses and Company Profitability

5-68
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48. Trick’s Costumes has 65 employees, who are distributed as follows:
Design 12 employees
Fabrication 30 employees
Purchasing 8 employees
Administration 10 employees
Sales 5 employees

The payroll-related costs for the year are $1,043,050. If Trick’s Costumes does use departmental classification, how much is

A.
$563,190.56

B.
$401,173.10

C.
$433,266.92

D.
$481,407.69

AACSB: Analytic
AICPA: BB Resource Management
AICPA: FN Measurement
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-05 Labor Expenses and Company Profitability
Topic: Labor Expenses and Company Profitability

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49. Trick’s Costumes has 65 employees, who are distributed as follows:

Design 12 employees
Fabrication 30 employees
Purchasing 8 employees
Administration 10 employees
Sales 5 employees

The payroll-related costs for the year are $1,043,050. If Trick’s Costumes does use departmental classification, how much is

A.
$128,375.38

B.
$160,469.23

C.
$176,516.15

D.
$120,351.92

AACSB: Analytic
AICPA: BB Resource Management
AICPA: FN Measurement
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-05 Labor Expenses and Company Profitability
Topic: Labor Expenses and Company Profitability

5-70
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McGraw-Hill Education.
50. Trick’s Costumes has 65 employees, who are distributed as follows:

Design 12 employees
Fabrication 30 employees
Purchasing 8 employees
Administration 10 employees
Sales 5 employees

The payroll-related costs for the year are $1,043,050. If Trick’s Costumes does use departmental classification, how much is

A.
$192,563.08

B.
$240,703.85

C.
$208,610.00

D.
$160,469.23

AACSB: Analytic
AICPA: BB Resource Management
AICPA: FN Measurement
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-05 Labor Expenses and Company Profitability
Topic: Labor Expenses and Company Profitability

5-71
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McGraw-Hill Education.
51. Trick’s Costumes has 65 employees, who are distributed as follows:

Design 12 employees
Fabrication 30 employees
Purchasing 8 employees
Administration 10 employees
Sales 5 employees

The payroll-related costs for the year are $1,043,050. If Trick’s Costumes does use departmental classification, how much is

A.
$101,429.78

B.
$80,234.62

C.
$64,187.69

D.
$96,281.54

AACSB: Analytic
AICPA: BB Resource Management
AICPA: FN Measurement
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 05-05 Labor Expenses and Company Profitability
Topic: Labor Expenses and Company Profitability

5-72
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McGraw-Hill Education.
52. Which of the following best describes the function of a benefit analysis report?

A.
It is an analysis of the benefits paid to employees.

B.
It is an analysis of each employee’s benefit package.

C.
It is an analysis of the effect of labor costs on departmental profitability.

D.
It is an analysis of each department’s benefit to the company.

AACSB: Reflective Thinking

AICPA: BB Resource Management
AICPA: FN Decision Making
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-05 Labor Expenses and Company Profitability
Topic: Labor Expenses and Company Profitability

53.
What factor is not included in an employee’s total compensation report?

A.
Federal withholding tax deductions

B.
Paid time off like sick and vacation time

C.
Health and worker’s compensation insurance premiums

D.
Bonuses and other incentive programs

AACSB: Reflective Thinking

AICPA: BB Industry
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-06 Benefit Analysis as a Function of Payroll
Topic: Benefit Analysis as a Function of Payroll

5-73
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McGraw-Hill Education.
54.
Leah works for Toffolon Technicians in New Hampshire, where she earns $30,000 annually. She contributes 3% to her 401
additional 15% of Leah’s annual salary. What is Leah’s total annual compensation?

A.
$30,000

B.
$34,445

C.
$38,250

D.
$31,467

AACSB: Analytic
AICPA: BB Resource Management
AICPA: FN Measurement
Blooms: Evaluate
Difficulty: 3 Hard
Learning Objective: 05-06 Benefit Analysis as a Function of Payroll
Topic: Benefit Analysis as a Function of Payroll

55.
John works for Heinlein Hillclimbers in Wyoming, where he earns $26,500 annually. He contributes $150 per month to his 40
$5,250 in tuition reimbursement. Heinlein pays employer-only taxes and insurance that comprise an additional 18% of John’

A.
$26,500.00

B.
$39,675.25

C.
$40,710.00

D.
$39,633.25

AACSB: Analytic
AICPA: BB Resource Management
AICPA: FN Measurement
Blooms: Evaluate
Difficulty: 3 Hard
Learning Objective: 05-06 Benefit Analysis as a Function of Payroll
Topic: Benefit Analysis as a Function of Payroll

5-74
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McGraw-Hill Education.
56.
Maeisha works for Brown Corporation, where she earns $45,000. Her employer contributes 1% of her pay to her pension fun
an additional 12% of Maiesha’s annual salary. What is Maeisha’s total annual compensation?

A.
$56,230.00

B.
$54,849.30

C.
$50,766.80

D.
$54,451.30

AACSB: Analytic
AICPA: BB Resource Management
AICPA: FN Measurement
Blooms: Evaluate
Difficulty: 3 Hard
Learning Objective: 05-06 Benefit Analysis as a Function of Payroll
Topic: Benefit Analysis as a Function of Payroll

57.
Cordelia is an employee of Snaktyme Foods in Missouri. She earns $24,000 annually. Snaktyme has provided uniforms w
employer-only taxes and insurance that comprises an additional 14% of Cordelia’s annual salary. What is Cordelia’s total an

A.
$28,000

B.
$31,500

C.
$29,260

D.
$29,900

AACSB: Analytic
AICPA: BB Resource Management
AICPA: FN Measurement
Blooms: Evaluate
Difficulty: 3 Hard
Learning Objective: 05-06 Benefit Analysis as a Function of Payroll
Topic: Benefit Analysis as a Function of Payroll

5-75
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McGraw-Hill Education.
58. From which source is the annual compensation report data not gathered?

A.
Employee earnings report

B.
Vendor invoices

C.
Payroll tax reports

D.
Employee questionnaires

AACSB: Reflective Thinking

AICPA: BB Resource Management
AICPA: FN Decision Making
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-06 Benefit Analysis as a Function of Payroll
Topic: Benefit Analysis as a Function of Payroll

59. Which of the following tasks would not use the information from the Benefit Analysis Report?

A.
Budgeting

B.
Benchmarking

C.
Departmental Reporting

D.
Labor Planning

AACSB: Reflective Thinking

AICPA: BB Leveraging Technology
AICPA: FN Decision Making
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-06 Benefit Analysis as a Function of Payroll
Topic: Benefit Analysis as a Function of Payroll

5-76
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McGraw-Hill Education.
60. What is a potential consequence when a manager does not review a benefit analysis report?

A.
Incorrect departmental labor distribution

B.
Awareness of employee-related costs

C.
Increased departmental profitability

D.
Well-designed budgets

AACSB: Reflective Thinking

AICPA: BB Critical Thinking
AICPA: FN Decision Making
Blooms: Evaluate
Difficulty: 3 Hard
Learning Objective: 05-06 Benefit Analysis as a Function of Payroll
Topic: Benefit Analysis as a Function of Payroll

61.
Francesca earns $2,400 per pay period. Compute the FICA taxes for both employee and employer share. What is the total F

A.
$297.60

B.
$332.40

C.
$218.40

D.
$367.20

AACSB: Analytic
AICPA: BB Legal
AICPA: FN Measurement
Blooms: Apply
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-01 Employer-Paid and Employee-Paid Obligations
Topic: Employer-Paid and Employee-Paid Obligations

5-77
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McGraw-Hill Education.
62.
Jamie earns $232,000 annually. Compute the FICA taxes for both the employee and employer share. The Social Security w

A.
$21,524

B.
$14,270

C.
$18,160

D.
$17,872

AACSB: Analytic
AICPA: BB Legal
AICPA: FN Measurement
Blooms: Apply
Difficulty: 3 Hard
Gradable: automatic
Learning Objective: 05-01 Employer-Paid and Employee-Paid Obligations
Topic: Employer-Paid and Employee-Paid Obligations

63.
Anadama Painters has 15 employees and is located in South Dakota. The total wages for the last year was $389,458. What

A.
$608

B.
$645

C.
$630

D.
$620

AACSB: Analytic
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Apply
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-01 Employer-Paid and Employee-Paid Obligations
Topic: Employer-Paid and Employee-Paid Obligations

5-78
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McGraw-Hill Education.
64.
Deschutes Companies located in Oregon has a SUTA tax rate of 4.10% and a wage base of $35,000. During the last calend

A.
$16,247

B.
$16,709

C.
$15,323

D.
$15,785

AACSB: Analytic
AICPA: BB Critical Thinking
AICPA: FN Reporting
Blooms: Analyze
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-01 Employer-Paid and Employee-Paid Obligations
Topic: Employer-Paid and Employee-Paid Obligations

65
. The payroll-related taxes that an employer must pay are known as _______________________.

A.
Mandatory taxes

B.
Statutory deductions

C.
FICA taxes

D.
FUTA taxes

AACSB: Reflective Thinking

AICPA: BB Legal
AICPA: FN Research
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Employer-Paid and Employee-Paid Obligations
Topic: Employer-Paid and Employee-Paid Obligations

5-79
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McGraw-Hill Education.
66 The payroll tax(es) for which an employer must match the entire amount of the employee’s deduction include
. _______________________.

A.
FICA and Federal withholding tax.

B.
FUTA and SUTA.

C.
Social Security and Medicare (up to $117,000 and $200,000 in annual compensation
respectively).

D.
Federal withholding tax.

AACSB: Reflective Thinking

AICPA: BB Legal
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-01 Employer-Paid and Employee-Paid Obligations
Topic: Employer-Paid and Employee-Paid Obligations

67
The IRS uses the ___________________________ to determine how often a company must deposit payroll taxes.
.

A.
Previous year’s payroll tax deposits

B.
Firm’s income tax filings

C.
Lookback period

D.
Financial statements

AACSB: Communication
AICPA: BB Industry
AICPA: FN Measurement
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-02 Reporting Periods and Requirements for Employer Tax Deposits
Topic: Reporting Periods and Requirements for Employer Tax Deposits

5-80
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McGraw-Hill Education.
68
. The form that employers use to report their quarterly Federal income tax liability is _________________.

A.
Form 940

B.
Form 944

C.
Form 943

D.
Form 941

AACSB: Communication
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-03 Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Mid-Year and Year-End Employer Tax Reporting and Deposits

69
. The total of a firm’s annual wages and salaries must match on Forms _________________.

A.
W-2 and W-3

B.
940 and W-2

C.
W-3 and 941

D.
941 and W-2

AACSB: Reflective Thinking

AICPA: BB Legal
AICPA: FN Reporting
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 05-03 Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Mid-Year and Year-End Employer Tax Reporting and Deposits

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McGraw-Hill Education.
70 If an employer fails to make payroll tax deposits on time, the firm will be penalized if the IRS finds evidence of
. _____________________________.

A.
Willful disregard

B.
Inadvertent negligence

C.
Incompetent reporting

D.
Mistaken analysis

AACSB: Communication
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-04 Payroll as a Business Expense
Topic: Payroll as a Business Expense

71
. Employee expenses like benefits and other non-wage compensation may amount to at least another
_______________ of each employee’s annual pay.

A.
40%

B.
60%

C.
70%

D.
50%

AICPA: BB Industry
AICPA: FN Decision Making
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-05 Labor Expenses and Company Profitability
Topic: Labor Expenses and Company Profitability

5-82
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McGraw-Hill Education.
72
. _________________________ allows firms to allocate costs accurately among departments.

A.
Labor costing

B.
Labor distribution

C.
Compensation analysis

D.
Benefit analysis

AACSB: Communication
AICPA: BB Industry
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-05 Labor Expenses and Company Profitability
Topic: Labor Expenses and Company Profitability

73 A benefit analysis report may be compiled to reveal _________________________.

.

A.
Department profitability

B.
Employee productivity

C.
Labor distribution

D.
Departmental effectiveness

AACSB: Reflective Thinking

AICPA: BB Industry
AICPA: FN Decision Making
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 05-06 Benefit Analysis as a Function of Payroll
Topic: Benefit Analysis as a Function of Payroll

5-83
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McGraw-Hill Education.
74 A(n) _________________ reflects the total of salary/wages, bonuses, benefits, and employer paid costs in an
. employee’s pay.

A.
Financial position report

B.
Employee analysis report

C.
Form EM-42

D.
Total compensation report

AACSB: Communication
AICPA: BB Industry
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-06 Benefit Analysis as a Function of Payroll
Topic: Benefit Analysis as a Function of Payroll

5-84
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McGraw-Hill Education.