Payroll Accounting Quiz and Test

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If you have difficulty answering the following questions, learn more about this topic by reading our Payroll Accounting (Explanation).

The combination of the Social Security tax and the Medicare tax is referred to by the acronym __________.

The 2024 rate for the Social Security tax (excluding the Medicare tax) that is withheld from employees' salaries and wages up to a specified annual amount is __________%.

The combined rate for the Social Security tax and the Medicare tax to be withheld from each employee's gross wages up to $168,600 in 2024 is __________%.

The amount of FICA that should be withheld from an employee’s salary of $180,000 in the year 2024 is $__________.

What is the total amount of FICA that needs to be remitted by an employer in 2024 for an employee earning $50,000?

$1,450

$3,825

$6,200

$7,650

The pay earned by hourly-paid employees is usually referred to as __________.

The pay earned by managers who are paid semi-monthly is referred to as __________.

Which employee payroll classification will likely require an accrual adjusting entry for the gross salaries or wages at the end of a calendar month?

Exempt salaried employees paid semi-monthly

Hourly employees paid weekly

The federal form on which an employee indicates the number of allowances to be used by the employer when calculating the federal income tax withholding is the __________ form.

10.

An example of a court-ordered employee withholding is __________.

11.

The amount that an employee "clears" or "takes home" is the __________ pay.

12.

A tax paid by the employer that is 0.6% (net of credits) of each employee's first $7,000 of annual salary or wages is the federal __________ tax.

13.

A cost paid by the employer to cover an employee’s work-related injury is __________ insurance.

14.

An employee is hired at a pay rate of $10 per hour. During the past week, the employee worked 50 hours. The employee’s gross wages for the past week are __________.

$400

$450

$500

$550

Use the following information for Questions 15 – 17:
An employee worked the entire year of 2023 and earned two weeks of vacation as specified in the company’s labor agreement. The agreement also states that the two weeks of vacation shall be taken any time in 2024 and the amount paid will be 80 hours multiplied by the employee’s rate of pay at December 31, 2023. At December 31, 2023 the employee’s pay rate was $15. Assume that the company uses the accrual method of accounting.

15.

Which financial statements are affected in the year 2023?

Balance sheet only

Income statement only

Balance sheet & income statement

Neither the balance sheet nor the income statement

16.

The amount that will be reported on the 2024 income statement as Vacation Expense for the vacation taken in 2024 is $__________.

17.

When the employer pays the employee in 2024 for the vacation earned in 2023, what account will the company debit?

Cash

Vacation Expense

Vacation Payable

18.

In January 2024 an employer remits the state unemployment tax that pertains to its employees' wages for the final three months of 2023. On which income statement will the state unemployment tax expense appear under accrual accounting?

2023

2024

Use the following information for Questions 19 – 20:
An employer has computed the following amounts for its employee Mary during a week in January: gross wages $500.00; FICA tax withheld $38.25; federal income tax withholding $67.25; State income tax withholding $20.00; unemployment taxes $24.00; worker compensation insurance $5.00. The company does not provide health insurance, paid vacations, or any other benefits.

19.

What is the amount of Mary’s net pay?

$352.75

$357.75

$374.50

20.

What is the employer’s total expense for Mary’s employment during the week?

$505.00

$529.00

$567.25

$605.50

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