Question 1

Health Savings Accounts may not be used as pre-tax deductions for which type of costs?

Accepted Answer

A)  Child medical expenses 
B)  Gasoline expenses 
C)  Long-term care expenses 
D)  Prescription expenses 
A)  Child medical expenses 
B)  Gasoline expenses 
C)  Long-term care expenses 
D)  Prescription expenses

Question 2

Collin is a full-time exempt employee who earns $135,000 annually and has not yet reached the Social Security wage base.He is single with 1 withholding allowance and is paid semimonthly.He contributes 3% per pay period to his 401(k) and has pre-tax health insurance and AFLAC deductions of $150.00 and $25.00,respectively.Collin has a child support garnishment of $300.00 per pay period.What is his net pay? (Use the percentage method.Do not round interim calculations,only round final answer to two decimal points.) $\begin{array}{c}
\begin{array}{|l|}
\hline\text {Payroll Period}\
\
\hline\text {Weekly}\
\text {Biweekly}\
\text {Semimonthly}\
\text {Monthly}\
\text {Quarterly}\
\text {Semiannually}\
\text {Annually}\
\text {Daily or miscellaneous (each day of the payroll }\
\text {period)}\
\hline
\end{array}
\begin{array}{r|}
\hline\text {One Withholding}\
\text {Allowance}\
\hline\$ 76.90 \
 153.80 \
 166.70 \
 333.30 \
 1,000.00 \
2,000.00 \
 4,000.00 \
\
 15.40 \
\hline
\end{array}
\end{array}$

Accepted Answer

A)  $3,445.85 
B)  $3,712.19 
C)  $3,674.60 
D)  $3,585.14 
A)  $3,445.85 
B)  $3,712.19 
C)  $3,674.60 
D)  $3,585.14

Question 3

Two classes of deductions exist: pre-tax and post-tax.

Accepted Answer

A) True 
 B)False

Question 4

A firm has headquarters in Indiana,but has offices in California and Utah.For employee taxation purposes,it may choose which of those three states income tax laws it wishes to use.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following guidelines does the IRS use to evaluate the tax treatment of supplemental health insurance?

Accepted Answer

A)  If the income derived is taxable, then the cost is tax-free. 
B)  If the income derived is nontaxable, then the cost must be taxed. 
C)  If the income derived will be tax free, then the cost is also tax exempt. 
D)  If the income derived is taxable, then the cost is taxable. 
A)  If the income derived is taxable, then the cost is tax-free. 
B)  If the income derived is nontaxable, then the cost must be taxed. 
C)  If the income derived will be tax free, then the cost is also tax exempt. 
D)  If the income derived is taxable, then the cost is taxable.

Question 6

Which of the following payment methods is growing in popularity among employees?

Accepted Answer

A)  Cash 
B)  Check 
C)  Direct Deposit 
D)  Paycard 
A)  Cash 
B)  Check 
C)  Direct Deposit 
D)  Paycard

Question 7

Warren is a married employee with six withholding allowances.During the most recent biweekly pay period,he earned $9,450.00.Using the percentage method,compute Warren's Federal income tax.(Do not round interim calculations,only round final answer to two decimal points.) $\begin{array}{c}
\begin{array}{|l|}
\hline\text {Payroll Period}\
\
\hline\text {Weekly}\
\text {Biweekly}\
\text {Semimonthly}\
\text {Monthly}\
\text {Quarterly}\
\text {Semiannually}\
\text {Annually}\
\text {Daily or miscellaneous (each day of the payroll }\
\text {period)}\
\hline
\end{array}
\begin{array}{r|}
\hline\text {One Withholding}\
\text {Allowance}\
\hline\$ 76.90 \
 153.80 \
 166.70 \
 333.30 \
 1,000.00 \
2,000.00 \
 4,000.00 \
\
 15.40 \
\hline
\end{array}
\end{array}$

Accepted Answer

A)  $2,490.15 
B)  $2,156.90 
C)  $1,796.94 
D)  $1,602.25 
A)  $2,490.15 
B)  $2,156.90 
C)  $1,796.94 
D)  $1,602.25

Question 8

Social Security tax has a wage base,which is the minimum amount an employee must earn before they will have the Social Security tax deduction.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following deductions cannot be taken on a pre-tax basis?

Accepted Answer

A)  Cafeteria plan 
B)  Garnishments 
C)  Health insurance 
D)  Retirement plan 
A)  Cafeteria plan 
B)  Garnishments 
C)  Health insurance 
D)  Retirement plan

Question 10

Retirement fund contributions are considered Pre-Tax Deductions because ____________________.

Accepted Answer

A)  Employees declare the funds on the personal tax return for the year 
B)  Employers are not liable for the taxes on this income 
C)  Contributors will pay tax on these funds once withdrawn during retirement 
D)  These funds are not considered disposable income 
A)  Employees declare the funds on the personal tax return for the year 
B)  Employers are not liable for the taxes on this income 
C)  Contributors will pay tax on these funds once withdrawn during retirement 
D)  These funds are not considered disposable income

Question 11

A retirement plan that allows employees to gain shares of ownership in their firm is called a(n) _____________.

Accepted Answer

A)  IRA 
B)  ESOP 
C)  SIMPLE 
D)  401(k) 
A)  IRA 
B)  ESOP 
C)  SIMPLE 
D)  401(k)

Question 12

Renee is a salaried exempt employee who earns an annual salary of $64,200,which is paid semimonthly.She is married with four withholding allowances.What is her total FICA tax liability per pay period? (Do not round interim calculations,only round final answer to two decimal points.)

Accepted Answer

A)  $165.85 
B)  $38.79 
C)  $204.64 
D)  $409.28 
A)  $165.85 
B)  $38.79 
C)  $204.64 
D)  $409.28

Question 13

What is not a reason why an employee may elect to have additional Federal income tax withheld?

Accepted Answer

A)  The employee has more than one job. 
B)  The employee's spouse is employed. 
C)  The employee wishes to reduce income tax liability. 
D)  The employee wants to satisfy prior years' tax obligations. 
A)  The employee has more than one job. 
B)  The employee's spouse is employed. 
C)  The employee wishes to reduce income tax liability. 
D)  The employee wants to satisfy prior years' tax obligations.

Question 14

The purpose of the wage base used for the Social Security tax is ______________________________.

Accepted Answer

A)  To determine when to start withholding the tax from an employee's pay 
B)  To establish a maximum salary level after which the tax does not apply to the employee's pay 
C)  To determine the amount of Social Security tax to withhold from an employee's pay 
D)  To compute the total amount of Social Security tax that a firm must pay 
A)  To determine when to start withholding the tax from an employee's pay 
B)  To establish a maximum salary level after which the tax does not apply to the employee's pay 
C)  To determine the amount of Social Security tax to withhold from an employee's pay 
D)  To compute the total amount of Social Security tax that a firm must pay

Question 15

Which of the following best describes a SEP?

Accepted Answer

A)  The employer or employee establishes and employer contributes to a tax-favorable IRA. 
B)  The employer establishes a tax-favorable IRA for the employee. 
C)  The employee rolls over an existing IRA to his or her employer and the current employer continues contributions. 
D)  The employer creates a taxable IRA to which the employee must make a defined contribution. 
A)  The employer or employee establishes and employer contributes to a tax-favorable IRA. 
B)  The employer establishes a tax-favorable IRA for the employee. 
C)  The employee rolls over an existing IRA to his or her employer and the current employer continues contributions. 
D)  The employer creates a taxable IRA to which the employee must make a defined contribution.

Question 16

Vivienne is a full-time exempt employee in DeKalb County,Indiana,and is paid biweekly.She earns $39,000 annually,and is married with 2 withholding allowances.Her state income tax deduction is $44.46,and the DeKalb County income tax deduction is $19.62.What is the total amount of her FICA,Federal,state,and local taxes per pay period,assuming no Pre-Tax Deductions? (Use the wage-bracket table to determine the Federal tax deduction.Do not round intermediate calculations,only round final answer to two decimal points.)

Accepted Answer

A)  $239.83 
B)  $320.83 
C)  $265.83 
D)  $273.83 
A)  $239.83 
B)  $320.83 
C)  $265.83 
D)  $273.83

Question 17

Brent is a full-time exempt employee in Clark County,Indiana.He earns an annual salary of $48,000 and is paid semimonthly.He is married with 3 withholding allowances.His state income tax per pay period is $57.38,and Clark County income tax is $33.75 per pay period.What is the total of FICA,Federal,state,and local deductions per pay period,assuming no Pre-Tax Deductions? (Use the wage-bracket table to determine Federal taxes.Do not round intermediate calculations,only round final answer to two decimal points.)

Accepted Answer

A)  $369.36 
B)  $306.13 
C)  $325.13 
D)  $378.13 
A)  $369.36 
B)  $306.13 
C)  $325.13 
D)  $378.13

Question 18

What role does the employer play regarding an employee's Federal withholding tax?

Accepted Answer

A)  Collector and depositor 
B)  Reporter and depositor 
C)  Collector and verifier 
D)  Verifier and reporter 
A)  Collector and depositor 
B)  Reporter and depositor 
C)  Collector and verifier 
D)  Verifier and reporter

Question 19

Andie earned $680.20 during the most recent weekly pay period.She is single with 3 withholding allowances and needs to decide between contributing 2.5% and $25 to her 401(k) plan.If she chooses the method that results in the lowest taxable income,how much will be withheld for Federal income tax (based on the following table)?

Accepted Answer

A)  $58.00 
B)  $60.00 
C)  $48.00 
D)  $47.00 
A)  $58.00 
B)  $60.00 
C)  $48.00 
D)  $47.00

Question 20

The use of paycards as a means of transmitting employee pay began in the 1990s with over-the-road drivers out of a need to transmit funds reliably on payday.

Accepted Answer

A) True 
 B)False

Health Savings Accounts may not be used as pre-tax deductions for which type of costs?

Two classes of deductions exist: pre-tax and post-tax.

A firm has headquarters in Indiana,but has offices in California and Utah.For employee taxation purposes,it may choose which of those three states income tax laws it wishes to use.

Which of the following guidelines does the IRS use to evaluate the tax treatment of supplemental health insurance?

Which of the following payment methods is growing in popularity among employees?

Social Security tax has a wage base,which is the minimum amount an employee must earn before they will have the Social Security tax deduction.

Which of the following deductions cannot be taken on a pre-tax basis?

Retirement fund contributions are considered Pre-Tax Deductions because ____________________.

A retirement plan that allows employees to gain shares of ownership in their firm is called a(n) _____________.

Renee is a salaried exempt employee who earns an annual salary of $64,200,which is paid semimonthly.She is married with four withholding allowances.What is her total FICA tax liability per pay period? (Do not round interim calculations,only round final answer to two decimal points.)

What is not a reason why an employee may elect to have additional Federal income tax withheld?

The purpose of the wage base used for the Social Security tax is ______________________________.

Which of the following best describes a SEP?

What role does the employer play regarding an employee's Federal withholding tax?

The use of paycards as a means of transmitting employee pay began in the 1990s with over-the-road drivers out of a need to transmit funds reliably on payday.

Payroll Practices and System Functions

Payroll System Procedures

Gross Pay Computation

Employer Payroll Taxes and Labor Planning

Payroll Register, Employee Earning Records, and Accounting System Entries

Filters

Exam 4: Employee Net Pay and Pay Methods

Health Savings Accounts may not be used as pre-tax deductions for which type of costs?

Two classes of deductions exist: pre-tax and post-tax.

A firm has headquarters in Indiana,but has offices in California and Utah.For employee taxation purposes,it may choose which of those three states income tax laws it wishes to use.

Which of the following guidelines does the IRS use to evaluate the tax treatment of supplemental health insurance?

Which of the following payment methods is growing in popularity among employees?

Social Security tax has a wage base,which is the minimum amount an employee must earn before they will have the Social Security tax deduction.

Which of the following deductions cannot be taken on a pre-tax basis?

Retirement fund contributions are considered Pre-Tax Deductions because ____________________.

A retirement plan that allows employees to gain shares of ownership in their firm is called a(n) _____________.

Renee is a salaried exempt employee who earns an annual salary of $64,200,which is paid semimonthly.She is married with four withholding allowances.What is her total FICA tax liability per pay period? (Do not round interim calculations,only round final answer to two decimal points.)

What is not a reason why an employee may elect to have additional Federal income tax withheld?

The purpose of the wage base used for the Social Security tax is ______________________________.

Which of the following best describes a SEP?

What role does the employer play regarding an employee's Federal withholding tax?

The use of paycards as a means of transmitting employee pay began in the 1990s with over-the-road drivers out of a need to transmit funds reliably on payday.

Payroll Practices and System Functions

Payroll System Procedures

Gross Pay Computation

Employer Payroll Taxes and Labor Planning

Payroll Register, Employee Earning Records, and Accounting System Entries

Filters