Question 1

What is a disadvantage to using paycards as a method of transmitting employee compensation?

Accepted Answer

A) Convenience of retrieving pay disbursements. 
B) Potential withdrawal and point-of-sale limitations. 
C) Ease of paying traveling employees. 
D) Acceptance of paycards at many locations.

Question 2

Sammy contributes 4% of her salary to a 401(k)plan,$50 per pay period to a charitable contribution,$140 per pay period to union dues,and $50 per pay period to a section 125 qualified insurance plan offered by her employer.Which contributions must be taken on a post-tax basis? (You may select more than one answer. )

Accepted Answer

A) 401(k)contribution 
B) Section 125 insurance plan 
C) Union dues 
D) Charitable contribution

Question 3

The amount of federal income tax withheld decreases as the number of allowances increases.

Accepted Answer

A) True 
 B)False

Question 4

What is an advantage of direct deposit from the employee's perspective?

Accepted Answer

A) Long processing times for pay disbursements. 
B) Secure access to compensation. 
C) The requirement to have a bank account. 
D) Access to payroll data on non-secured website.

Question 5

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

Question 6

Brent is a full-time exempt employee in Clark County,Indiana.He earns an annual salary of $45,000 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.Round your final answer to 2 decimal places. )

Accepted Answer

A) $303.36 
B) $306.45 
C) $318.13 
D) $323.57

Question 7

Why might an employee elect to have additional federal income tax withheld? (You may select more than one answer. )

Accepted Answer

A) Charitable contributions. 
B) Union Dues. 
C) Child Support payments. 
D) Consumer Credit liens.

Question 8

The annual payroll tax guide that the IRS distributes is called ________.

Accepted Answer

A) The IRS tax guide 
B) Publication E 
C) Circular 15 
D) Publication 15

Question 9

Tierney is a full-time nonexempt salaried employee who earns $990 per biweekly pay period.She is single with 1 withholding allowance and both lives and works in Maryland.Assuming that she had no overtime,what is the total of her Federal and state taxes for a pay period? (Use the wage-bracket tables.Maryland state income rate is 2.0%.Round final answer to 2 decimal places. )

Accepted Answer

A) $84.25 
B) $94.80 
C) $95.95 
D) $100.78

Question 10

Janna is a salaried nonexempt employee in Laramie,Wyoming,who earns $30,000 per year for a standard 40-hour workweek and is paid biweekly.She is single with one withholding allowance.During the last pay period,she worked 5 hours of overtime.She contributes 3% of her gross pay to her 401(k)on a pre-tax basis and has a garnishment of 10% of her disposable income for a consumer credit garnishment.What is her net pay? (Use the wage-bracket method.Do not round intermediate calculations.Round your final answer to 2 decimal places. )

Accepted Answer

A) $998.90 
B) $913.90 
C) $917.46 
D) $886.96

Question 11

The wage-bracket of determining federal tax withholding yields more accurate amounts than the percentage method.

Accepted Answer

A) True 
 B)False

Question 12

Charitable contributions are an example of post-tax voluntary deductions.

Accepted Answer

A) True 
 B)False

Question 13

Julio is single with 1 withholding allowance.He earned $1,025.00 during the most recent semimonthly pay period.He needs to decide between contributing 3% and $30 to his 401(k)plan.If he 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) $79.00 
B) $86.00 
C) $74.00 
D) Both yield the same tax amount

Question 14

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 intermediate calculations.Round your final answer to 2 decimal places. )

Accepted Answer

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

Question 15

Amity is an employee with a period gross pay of $2,000.She elects to have 3% of her gross pay withheld for her 401(k)contribution.What will be her taxable income be for federal income taxes?

Accepted Answer

A) $2,000 
B) $1,970 
C) $1,940 
D) $1,910

Question 16

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 17

Nickels Company is located in West Virginia has employees who live in Ohio,Florida,Tennessee,and West Virginia.For which state(s)should the company collect and remit state income tax? (You may select more than one answer. )

Accepted Answer

A) Florida 
B) Tennessee 
C) Ohio 
D) West Virginia

Question 18

Jeannie is an adjunct faculty at a local college,where she earned $680.00 during the most recent semimonthly pay period.Her prior year-to-date pay is $18,540.She is single and has one withholding allowance.What is her Social Security tax for the pay period?

Accepted Answer

A) $48.02 
B) $39.24 
C) $44.18 
D) $42.16

Question 19

Manju is a full-time exempt employee living in Illinois who earns $43,680 annually and is paid biweekly.She is married with three withholding allowances.What is the total of her Federal and state income tax deductions for the most recent pay period? (Use the wage bracket tables.Illinois state income tax rate is 3.75%. )

Accepted Answer

A) $139 
B) $142 
C) $148 
D) $151

Question 20

How are income taxes and FICA taxes applied to grossed-up pay? (You may select more than one answer. )

Accepted Answer

A) Subtract the sum of the income tax rate and FICA tax rate from 100 percent. 
B) Compute the sum of the income tax and FICA tax rates. 
C) Divide the net pay by the net tax rate. 
D) Multiply the gross pay by the sum of the income tax and FICA tax rates.

Exam 5: Employee Net Pay and Pay Methods

What is a disadvantage to using paycards as a method of transmitting employee compensation?

The amount of federal income tax withheld decreases as the number of allowances increases.

What is an advantage of direct deposit from the employee's perspective?

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

Why might an employee elect to have additional federal income tax withheld? (You may select more than one answer. )

The annual payroll tax guide that the IRS distributes is called ________.

The wage-bracket of determining federal tax withholding yields more accurate amounts than the percentage method.

Charitable contributions are an example of post-tax voluntary deductions.

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 intermediate calculations.Round your final answer to 2 decimal places. )

Amity is an employee with a period gross pay of $2,000.She elects to have 3% of her gross pay withheld for her 401(k) contribution.What will be her taxable income be for federal income taxes?

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.

Nickels Company is located in West Virginia has employees who live in Ohio,Florida,Tennessee,and West Virginia.For which state(s) should the company collect and remit state income tax? (You may select more than one answer. )

Jeannie is an adjunct faculty at a local college,where she earned $680.00 during the most recent semimonthly pay period.Her prior year-to-date pay is $18,540.She is single and has one withholding allowance.What is her Social Security tax for the pay period?

How are income taxes and FICA taxes applied to grossed-up pay? (You may select more than one answer. )