Payroll Accounting 2016 2nd Edition Landin Test Bank

Payroll Accounting 2016 2nd Edition
Landin Test Bank

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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, Federal withholding tax, and FUTA tax.
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
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
5-1
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McGraw-Hill Education.
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
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; and state income tax, $10.50. What is the employer’s share for these taxes?
A. $87.34
B. $55.34
C. $44.84
D. $35.94
5-2
14. Jeremiah is a full-time exempt employee who earns an annual salary of $215,000. What is the employer’s
annual FICA tax responsibility for Jeremiah’s salary, based on an annual wage base of $118,500?
A. $10,464.50
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 than $7,000 during the year. What is Johnny’s Tavern’s FUTA tax liability?
A. $22,616.88
B. $1,589.69
C. $7,000.00
D. $672.00
16. PCD Inc. operates as a Nevada business. The SUTA wage base for Nevada is $27,800. PCD Inc.’s SUTA tax
rate is 4.5%. The employees’ annual earnings for the past calendar year are as follows: Annabelle
$36,750, Beatrice $24,880, Michael $42,200 ,Howard $26,500
What is PCD Inc.’s SUTA tax liability for the year?
A. $5,864.85
B. $4,814.10
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 $36,750, Beatrice $24,880, Michael $42,200, Howard $6,500.
What is PCD Inc.’s FUTA tax liability for the year?
A. $28,000
B. $26,500
C. $168
D. $165
5-3
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. The employee earnings for the past calendar year are: B. Gilfilan $22,180, P. Laubach
$37,690, S. Loftin $15,320, M. Moravec $9,840
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 for the past year are: T. Borek $17,875, G. Hizny $2,250, A.McBean $18,550, C.
Triebert $6,950.
What are the employer-share taxes for FUTA, SUTA, ETT (.1%), and FICA for the year? (ignore worker’s
compensation insurance)
A. $4,881.54
B. $8,349.23
C. $5,108.31
D. $4,835.91
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.
5-4
22. Van Buuren Enterprises had payroll tax liability of $42,450 during the lookback period. How frequently
will the firm deposit its payroll taxes?
A. Monthly
B. Annually
C. Semi-weekly
D. Next Business Day
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 basis. Assuming that no payday has a tax liability in excess of $100,000,
when is their payroll tax deposit due?
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
25. Kohlmeier Industries had $87,950 of annual payroll taxes during the lookback period. The firm pays its
employees biweekly on Wednesdays. Assuming that no payday has a tax liability in excess of $100,000,
when are the payroll tax deposits due?
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
5-5
26. Hodgdon Industries, a semi-weekly schedule depositor, pays its employees semimonthly on the 1st and
15th of the month. Per company policy, employees are paid their annual bonuses on December 15, the
final payday of the year. On Monday, December 15, the bonuses were paid and the payroll tax liability
was $103,850. When are the payroll taxes due for the December 15 pay date?
A. Friday, December 19
B. Monday, December 22
C. Wednesday, December 17
D. Tuesday, December 16
27. Andreosatos Enterprises has received a letter from the IRS that due to their tax liability of $1,950 during
the lookback period, they are an annual depositor. Which tax form should they file to reconcile their
payroll taxes?
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 downturn during which the firm had to layoff all but one employee. Their
payroll taxes have decreased to less than $500 per month. Which form should they file to reconcile their
taxes?
A. Form 944
B. Form 943
C. Form 942
D. Form 941
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
5-6
30. McBean Farms has the following information on their Form 941:
What amount should be entered in Column 1, Lines 5a and 5c? (Assume no Section 125 health insurance
and that none of the employees 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
A. $17,400.67 and $4,069.51, respectively

B. $140,328.00
D. $156,592
5-7
32. Daigneault Designs has the following amounts listed on their Form 941:
What amounts belong in Column 2, Lines 5a and 5c?

B. $4,169.28 and $975.19, respectively
D. $8,338.75 and $975.19, respectively
What amount belongs on line 5e?
A. $67,248.00
B. $8,338.75
C. $10,288.94
D. $5,860.00
5-8
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
5-9
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.
5-10
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
5-11
What amount should be entered on line 7?
A. $84,000
B. $1,535.91
C. $171,984.29
D. $1,031.91
A. $504.00
B. $1,008.00
C. $1,535.91
D. $1,031.91
5-12
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
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
5-13
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 allocated to each department?
A. $153,910
B. $202,850
C. $208,610
D. $260,763
5-14
Design 12 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 allocated to the Design department? (Do not round intermediate calculations.
Round final answer to 2 decimal places.)
A. $208,210.50
B. $192,563.08
C. $128,375.38
D. $160,469.23

Design 12 employees
Sales 5 employees
classification, how much is allocated to the Fabrication department? (Do not round intermediate
calculations. Round final answer to 2 decimal places.)
A. $563,190.56
B. $401,173.10
C. $433,266.92
D. $481,407.69
5-15
Design 12 employees
Sales 5 employees
classification, how much is allocated to the Purchasing department? (Do not round intermediate
A. $128,375.38
B. $160,469.23
C. $176,516.15
D. $120,351.92
Design 12 employees
Sales 5 employees
classification, how much is allocated to the Administration department? (Do not round intermediate
A. $192,563.08
B. $240,703.85
C. $208,610.00
D. $160,469.23
5-16
Design 12 employees
Sales 5 employees
classification, how much is allocated to the Sales department? (Do not round intermediate calculations.
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.
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
5-17
54. Leah works for Toffolon Technicians in New Hampshire, where she earns $30,000 annually. She
contributes 3% to her 401(k), and her employer contributes an additional 1.5% (a 50% match). Her
employer contributes $200 per month for her health insurance, $50 per month for her life insurance, and
$25 per month for her AD&D insurance. Toffolon Technicians pays employer-only taxes and insurance
that comprises an 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
55. John works for Heinlein Hillclimbers in Wyoming, where he earns $26,500 annually. He contributes $150
per month to his 401(k), of which his employer matches half of his contribution. Heinlein Hillclimbers
contributes $150 per month to his health insurance, $30 per month to his life insurance, and $50 per
month to his AD&D policy. He receives a 2% profit-sharing bonus at the end of each year and $5,250 in
tuition reimbursement. Heinlein pays employer-only taxes and insurance that comprises an additional
18% of John’s annual salary. What is John’s total annual compensation?
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 and pays the following monthly amounts for her insurance: health, $300; life, $50;
AD&D, $25. She receives $40 per month for her gym membership and receives a $400 bonus at the end
of the year. Brown Corporation pays employer-only taxes and insurance that comprises 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
5-18
57. Cordelia is an employee of Snaktyme Foods in Missouri. She earns $24,000 annually. Snaktyme has
provided uniforms worth $350 and training worth $850 as part of her employment. She contributes 4%
to her 401(k), of which her employer matches half. Cordelia’s employer pays the following monthly
amounts toward her insurance: health, $125; life, $50; AD&D, $30. Snaktyme Foods pays employer-only
taxes and insurance that comprises an additional 14% of Cordelia’s annual salary. What is Cordelia’s total
annual compensation?
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
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
5-19
61. Francesca earns $2,400 per pay period. Compute the FICA taxes for both employee and employer share.
What is the total FICA tax liability for Francesca’s pay per pay period? (Assume that Francesca has not
met the FICA wage base.)
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 base is $118,500. What is the total annual FICA tax liability for Jamie’s pay?
A. $15,510
B. $14,270
C. $18,160
D. $17,872
63. Anadama Painters has 15 employees and is located in South Dakota. The total wages for the last year
was $389,458. What was the FUTA tax liability for the year? (Assume that all employees have
exceeded the annual FUTA wage base of $7,000 per employee and that the FUTA rate is 0.6%.)
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 year the company paid $393,750 in wages and salaries for 11 employees. What is
the total of the FUTA and SUTA tax liabilities for Deschutes Companies? (Assume that all employees have
exceeded the FUTA and SUTA wage bases.)
A. $16,247
B. $16,709
C. $15,323
D. $15,785
5-20
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 $118,500 and $200,000 in annual compensation
respectively).
D. Federal withholding tax.
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
5-21
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
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%
72. _________________________ allows firms to allocate costs accurately among departments.
A. Labor costing
B. Labor distribution
C. Compensation analysis
D. Benefit analysis
5-22
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
5-23
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 List Employer-Paid and Employee-Paid Obligations
Topic: List 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, Federal withholding tax, and FUTA tax.
FALSE
AICPA: BB Industry
AICPA: FN Research
Blooms: Understand
Difficulty: 1 Easy
3. FUTA and SUTA tax rates vary from state to state.
FALSE
AICPA: BB Industry
AICPA: FN Research
Blooms: Understand
Difficulty: 1 Easy
5-24
4. A firm’s frequency of tax deposits is determined by payroll tax liability during the lookback period.
TRUE
AICPA: BB Industry
AICPA: FN Measurement
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-02 Discuss Reporting Periods and Requirements for Employer Tax Deposits
Topic: Discuss Reporting Periods and Requirements for Employer Tax Deposits
5. A firm that had $55,650 in payroll tax liability will be a monthly schedule depositor.
FALSE
AICPA: BB Industry
Blooms: Understand
Difficulty: 1 Easy
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 Prepare Mid-Year and Year-End Employer Tax Reporting and Deposits
Topic: Prepare 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
AICPA: BB Legal
5-25
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
8. Form 940 is the report of tax liability for monthly schedule depositors.
FALSE

AICPA: BB Legal
AICPA: FN Reporting
Blooms: Understand
Difficulty: 2 Medium
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.
FALSE
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
10. Employers who inadvertently fail to file quarterly or annual reports may be subject to penalties.
TRUE
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-04 Describe Payroll Within the Context of Business Expenses
Topic: Describe Payroll Within the Context of Business Expenses
5-26
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
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
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

AICPA: BB Industry
AICPA: FN Research
Blooms: Understand
Difficulty: 1 Easy
5-27
13. On a recent paycheck, Mayim’s taxes were as follows: Federal withholding, $32; Social Security tax,
$35.94; Medicare, $8.90; and state income tax, $10.50. What is the employer’s share for these taxes?
A. $87.34
B. $55.34
C. $44.84
D. $35.94
AACSB: Analytic
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Apply
14. Jeremiah is a full-time exempt employee who earns an annual salary of $215,000. What is the employer’s
annual FICA tax responsibility for Jeremiah’s salary, based on an annual wage base of $118,500?
A. $10,464.50
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
5-28
15. Johnny’s Tavern had 16 employees and total annual wages of $376,948 during the previous year. All
employees earned more than $7,000 during the year. What is Johnny’s Tavern’s FUTA tax liability?
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
16. PCD Inc. operates as a Nevada business. The SUTA wage base for Nevada is $27,800. PCD Inc.’s SUTA tax
rate is 4.5%. The employees’ annual earnings for the past calendar year are as follows: Annabelle
$36,750, Beatrice $24,880, Michael $42,200 ,Howard $26,500
What is PCD Inc.’s SUTA tax liability for the year?
A. $5,864.85
B. $4,484.10
C. $7,037.82
D. $5,733.72
AACSB: Analytic
Blooms: Analyze
5-29
17. PCD Inc. operates as a Nevada business. The employees’ annual earnings for the past calendar year are
as follows: Annabelle $36,750, Beatrice $24,880, Michael $42,200, Howard $6,500.
What is PCD Inc.’s FUTA tax liability for the year?
A. $28,000
B. $26,500
C. $168
D. $165
AACSB: Analytic
AICPA: FN Reporting
Blooms: Analyze
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. The employee earnings for the past calendar year are: B. Gilfilan $22,180, P. Laubach
$37,690, S. Loftin $15,320, M. Moravec $9,840
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
Blooms: Evaluate
Difficulty: 3 Hard
5-30
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 for the past year are: T. Borek $17,875, G. Hizny $2,250, A.McBean $18,550, C.
Triebert $6,950.
What are the employer-share taxes for FUTA, SUTA, ETT (.1%), and FICA for the year? (ignore
worker’s compensation insurance)
A. $4,881.54
B. $8,349.23
C. $5,108.31
D. $4,835.91
AACSB: Analytic
Blooms: Evaluate
Difficulty: 3 Hard
20. As of 2014, the IRS mandated that all electronic tax deposits be submitted through:
A. AFTPS.
B. ESTPF.
C. EPS.
D. EFTPS.

AICPA: BB Industry
AICPA: FN Reporting
Blooms: Remember
Difficulty: 1 Easy
5-31
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.

AICPA: BB Industry
Blooms: Remember
Difficulty: 1 Easy
22. Van Buuren Enterprises had payroll tax liability of $42,450 during the lookback period. How
frequently will the firm deposit its payroll taxes?
A. Monthly
B. Annually
C. Semi-weekly
D. Next Business Day
AACSB: Analytic
AICPA: BB Industry
AICPA: FN Reporting
Blooms: Apply
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

AICPA: BB Industry
5-32
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
24. Van Oot’s Bicycles had $19,489 of payroll tax liability during their lookback period. They pay their
employees on a semimonthly basis. Assuming that no payday has a tax liability in excess of $100,000,
when is their payroll tax deposit due?
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
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Apply
25. Kohlmeier Industries had $87,950 of annual payroll taxes during the lookback period. The firm pays its
employees biweekly on Wednesdays. Assuming that no payday has a tax liability in excess of $100,000,
when are the payroll tax deposits due?
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
AICPA: BB Industry
AICPA: FN Reporting
Blooms: Apply
5-33
26. Hodgdon Industries, a semi-weekly schedule depositor, pays its employees semimonthly on the 1st and
15th of the month. Per company policy, employees are paid their annual bonuses on December 15, the
final payday of the year. On Monday, December 15, the bonuses were paid and the payroll tax liability
was $103,850. When are the payroll taxes due for the December 15 pay date?
A. Friday, December 19
B. Monday, December 22
C. Wednesday, December 17
D. Tuesday, December 16
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Analyze
27. Andreosatos Enterprises has received a letter from the IRS that due to their tax liability of $1,950 during
the lookback period, they are an annual depositor. Which tax form should they file to reconcile their
payroll taxes?
A. Form 940
B. Form 945
C. Form 944
D. Form 941
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Apply
5-34
28. Lesch & Sons has been and is currently a monthly schedule depositor. During the current year, they
experienced an economic downturn during which the firm had to layoff all but one employee. Their
payroll taxes have decreased to less than $500 per month. Which form should they file to reconcile their
taxes?
A. Form 944
B. Form 943
C. Form 942
D. Form 941
AICPA: FN Reporting
Blooms: Analyze
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
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Analyze
5-35
A. $16,264.00
B. $140,328.00
D. $156,592

AICPA: BB Industry
AICPA: FN Reporting
Blooms: Apply
5-36

B. $140,328.00
D. $156,592
AICPA: BB Industry
AICPA: FN Reporting
Blooms: Apply
Difficulty: 3 Hard
5-37
What amounts belong in Column 2, Lines 5a and 5c?

B. $4,169.28 and $975.19, respectively
D. $8,338.75 and $975.19, respectively
AICPA: BB Industry
AICPA: FN Reporting
Blooms: Analyze
5-38
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
5-39
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
5-40
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
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: FN Reporting
Blooms: Evaluate
Difficulty: 3 Hard
5-41
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
5-42
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
AACSB: Analytic
AICPA: BB Industry
AICPA: FN Reporting
Blooms: Analyze
Difficulty: 3 Hard
5-43
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
5-44
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
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

AICPA: BB Industry
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
5-45
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.

AICPA: FN Reporting
Blooms: Evaluate
Difficulty: 3 Hard
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
5-46
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

AICPA: BB Industry
Blooms: Understand
Difficulty: 1 Easy
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.

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-05 Relate Labor Expenses to Company Profitability
Topic: Relate Labor Expenses to Company Profitability
5-47
Design 12 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 allocated to each department?
A. $153,910
B. $202,850
C. $208,610
D. $260,763
AACSB: Analytic
Blooms: Apply
5-48
Design 12 employees
Sales 5 employees
classification, how much is allocated to the Design department? (Do not round intermediate calculations.
A. $208,210.50
B. $192,563.08
C. $128,375.38
D. $160,469.23
AACSB: Analytic
Blooms: Analyze
5-49
Design 12 employees
Sales 5 employees
classification, how much is allocated to the Fabrication department? (Do not round intermediate
A. $563,190.56
B. $401,173.10
C. $433,266.92
D. $481,407.69
AACSB: Analytic
Blooms: Analyze
5-50
Design 12 employees
Sales 5 employees
classification, how much is allocated to the Purchasing department? (Do not round intermediate
A. $128,375.38
B. $160,469.23
C. $176,516.15
D. $120,351.92
AACSB: Analytic
Blooms: Analyze
5-51
Design 12 employees
Sales 5 employees
classification, how much is allocated to the Administration department? (Do not round intermediate
A. $192,563.08
B. $240,703.85
C. $208,610.00
D. $160,469.23
AACSB: Analytic
Blooms: Analyze
5-52
Design 12 employees
Sales 5 employees
classification, how much is allocated to the Sales department? (Do not round intermediate calculations.
A. $101,429.78
B. $80,234.62
C. $64,187.69
D. $96,281.54
AACSB: Analytic
Blooms: Analyze
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.

Blooms: Understand
Difficulty: 1 Easy
5-53
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

AICPA: BB Industry
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 05-06 Complete Benefit Analysis as a Function of Payroll
Topic: Complete Benefit Analysis as a Function of Payroll
54. Leah works for Toffolon Technicians in New Hampshire, where she earns $30,000 annually. She
contributes 3% to her 401(k), of which her employer matches 1.5%. Her employer contributes $200 per
month for her health insurance, $50 per month for her life insurance, and $25 per month for her AD&D
insurance. Toffolon Technicians pays employer-only taxes and insurance that comprises an 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
Blooms: Evaluate
Difficulty: 3 Hard
5-54
55. John works for Heinlein Hillclimbers in Wyoming, where he earns $26,500 annually. He contributes $150
per month to his 401(k), of which his employer matches half of his contribution. Heinlein Hillclimbers
contributes $150 per month to his health insurance, $30 per month to his life insurance, and $50 per
month to his AD&D policy. He receives a 2% profit-sharing bonus at the end of each year and $5,250 in
tuition reimbursement. Heinlein pays employer-only taxes and insurance that comprises an additional
18% of John’s annual salary. What is John’s total annual compensation?
A. $26,500.00
B. $39,675.25
C. $40,710.00
D. $39,633.25
AACSB: Analytic
Blooms: Evaluate
Difficulty: 3 Hard
56. Maeisha works for Brown Corporation, where she earns $45,000. Her employer contributes 1% of her pay
to her pension fund and pays the following monthly amounts for her insurance: health, $300; life, $50;
AD&D, $25. She receives $40 per month for her gym membership and receives a $400 bonus at the end
of the year. Brown Corporation pays employer-only taxes and insurance that comprises 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
Blooms: Evaluate
Difficulty: 3 Hard
5-55
57. Cordelia is an employee of Snaktyme Foods in Missouri. She earns $24,000 annually. Snaktyme has
provided uniforms worth $350 and training worth $850 as part of her employment. She contributes 4%
to her 401(k), of which her employer matches half. Cordelia’s employer pays the following monthly
amounts toward her insurance: health, $125; life, $50; AD&D, $30. Snaktyme Foods pays employer-only
taxes and insurance that comprises an additional 14% of Cordelia’s annual salary. What is Cordelia’s total
annual compensation?
A. $28,000
B. $31,500
C. $29,260
D. $29,900
AACSB: Analytic
Blooms: Evaluate
Difficulty: 3 Hard
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

Blooms: Understand
Difficulty: 1 Easy
5-56
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

AICPA: BB Leveraging Technology
Blooms: Understand
Difficulty: 1 Easy
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

Blooms: Evaluate
Difficulty: 3 Hard
61. Francesca earns $2,400 per pay period. Compute the FICA taxes for both employee and employer share.
What is the total FICA tax liability for Francesca’s pay per pay period? (Assume that Francesca has not
met the FICA wage base.)
A. $297.60
B. $332.40
C. $218.40
D. $367.20
AACSB: Analytic
AICPA: BB Legal
5-57
Blooms: Apply
62. Jamie earns $232,000 annually. Compute the FICA taxes for both the employee and employer share. The
Social Security wage base is $118,500. What is the total annual FICA tax liability for Jamie’s pay?
A. $15,510
B. $14,270
C. $18,160
D. $17,872
AACSB: Analytic
AICPA: BB Legal
Blooms: Apply
Difficulty: 3 Hard
63. Anadama Painters has 15 employees and is located in South Dakota. The total wages for the last year was
$389,458. What was the FUTA tax liability for the year? (Assume that all employees have exceeded the
annual FUTA wage base of $7,000 per employee and that the FUTA rate is 0.6%.)
A. $608
B. $645
C. $630
D. $620
AACSB: Analytic
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Apply
5-58
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 year the company paid $393,750 in wages and salaries for 11 employees. What is
the total of the FUTA and SUTA tax liabilities for Deschutes Companies? (Assume that all employees have
exceeded the FUTA and SUTA wage bases.)
A. $16,247
B. $16,709
C. $15,323
D. $15,785
AACSB: Analytic
AICPA: FN Reporting
Blooms: Analyze
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

AICPA: BB Legal
AICPA: FN Research
Blooms: Remember
Difficulty: 1 Easy
5-59
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.

AICPA: BB Legal
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
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
AICPA: BB Industry
Blooms: Understand
Difficulty: 1 Easy
5-60
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
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
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

AICPA: BB Legal
AICPA: FN Reporting
Blooms: Understand
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
5-61
AICPA: BB Legal
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
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
Blooms: Understand
Difficulty: 1 Easy
72. _________________________ allows firms to allocate costs accurately among departments.
A. Labor costing
B. Labor distribution
C. Compensation analysis
D. Benefit analysis
AICPA: BB Industry
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
5-62
73. A benefit analysis report may be compiled to reveal _________________________.
A. Department profitability
B. Employee productivity
C. Labor distribution
D. Departmental effectiveness

AICPA: BB Industry
Blooms: Apply
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
AICPA: BB Industry
AICPA: FN Reporting
Blooms: Understand
Difficulty: 1 Easy
5-63

Payroll Accounting 2016 2nd Edition Landin Test Bank

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Payroll Accounting 2016 2nd Edition Landin Test Bank

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Payroll Accounting 2016 2nd Edition

Landin Test Bank

True / False Questions

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

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

Multiple Choice Questions

A. FUTA $1,686.20; SUTA $168

A. On the last day of the current month

A. By the end of the current month

A. Forms 940 and 944

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

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

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

What amount belongs on line 5e?

What amount belongs in box 13m?

What is Red Waterworks’ tax liability for Month 1?

What amount should be entered on line 7?

What amount should be entered on line 8?

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

A. Tax deposits and filings

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

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

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

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

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

A. Federal withholding tax deductions

A. Employee earnings report

A. Incorrect departmental labor distribution

A. FICA and Federal withholding tax.

A. Previous year’s payroll tax deposits

A. W-2 and W-3

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

A. Financial position report

True / False Questions

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

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

AACSB: Reflective Thinking

AACSB: Reflective Thinking

AACSB: Reflective Thinking

A. FUTA $1,686.20; SUTA $168

AACSB: Reflective Thinking

AACSB: Reflective Thinking

AACSB: Reflective Thinking

A. On the last day of the current month

A. By the end of the current month

A. Forms 940 and 944

AACSB: Reflective Thinking

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

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

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

What amount belongs on line 5e?

What amount belongs in box 13m?

What is Red Waterworks’ tax liability for Month 1?

What amount should be entered on line 7?

What amount should be entered on line 8?

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

AACSB: Reflective Thinking

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

AACSB: Reflective Thinking

A. Tax deposits and filings

AACSB: Reflective Thinking

AACSB: Reflective Thinking

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

AACSB: Reflective Thinking