| A | B |
|---|
| wage | The amount paid to an employee for every hour worked. (p. 346) |
| salary | A fixed annual sum of money divided among equal pay periods. (p. 346) |
| commission | A method of paying an employee based on the amount of sales the employee generates. (p. 346) |
| total earnings | The total amount paid by a business for an employee’s work, earned by a wage, salary, or commission. (p. 346) |
| pay period | The number of days or weeks of work covered by an employee’s paycheck. (p. 346) |
| payroll | The total amount earned by all employees for a pay period. (p. 346) |
| payroll clerk | The accounting staff position that compiles and computes payroll data, then prepares, journalizes, and posts payroll transactions. (p. 346) |
| time clock | A device used to record the dates and times of every employee’s arrivals and departures. (p. 347) |
| payroll taxes | Taxes based on the payroll of a business. (p. 351) |
| withholding allowance | A deduction from total earnings for each person legally supported by a taxpayer, including the employee. (p. 352) |
| payroll deduction | Any amount withheld from an employee’s gross earnings. (p. 352) |
| social security tax | A federal tax paid for old-age, survivors, and disability insurance. (p. 355) |
| Medicare tax | A federal tax paid for hospital insurance. (p. 355) |
| accumulated earnings | The total gross earnings year to date for an employee. (p. 355) |
| tax base | The maximum amount of gross earnings on which a tax is calculated. (p. 355) |
| qualified retirement plan | A retirement savings plan approved by the Internal Revenue Service that provides individuals with a tax benefit. (p. 356) |
| 401(k) | A qualified retirement plan sponsored by an employer. (p. 356) |
| individual retirement account | A qualified retirement plan that provides most individuals with a deferred federal income tax benefit. (p. 356) |
| Roth individual retirement account | A qualified retirement plan that allows tax-free withdrawals from the account. (p. 356) |
| payroll register | An accounting form that summarizes the earnings, deductions, and net pay of all employees for one pay period. (p. 358) |
| net pay | The total earnings paid to an employee after payroll taxes and other deductions. (p. 359) |
| employee earnings record | A business form used to record details of an employee’s earnings and deductions. (p. 360) |
| voucher check | A check with a detachable check stub that contains detailed information about the cash payment. (p. 364) |
| direct deposit | The payment of an employee’s net pay using electronic funds transfer. (p. 366) |
| A | How many hours were worked by an employee who arrived at 8:10 a.m. and departed at 12:10 p.m.? (A) 4 hours (B) 5 hours (C) 4 hours and 10 minutes (D) none of these. (p. 347) |
| B | How many hours were worked by an employee who arrived at 7:05 a.m. and departed at 6:05 p.m. with one hour off for lunch? (A) 11 hours (B) 10 hours (C) 12 hours (D) none of these. (p. 347) |
| A | Employee regular earnings are calculated as (A) regular hours times regular rate (B) total hours divided by regular rate (C) total hours plus overtime rate (D) overtime hours minus overtime rate. (p. 349) |
| D | Social security tax is calculated on (A) total earnings and marital status (B) number of withholding allowances (C) total earnings and number of withholding allowances (D) employee earnings up to a maximum paid in a calendar year. (p. 355) |
| C | A separate payroll checking account is used primarily to (A) simplify the payroll accounting system (B) help reduce the cost of preparing a payroll (C) provide additional protection and control payroll payments (D) eliminate employer earnings records. (p. 364) |
| T | A business may decide to pay employee salaries every week, every two weeks, twice a month, or once a month. (p. 346) |
| T | Today's time clocks can feed data directly into a company's computer system. (p. 348) |
| F | Total earnings are sometimes referred to as net pay or net earnings. (p. 346) |
| T | An hourly employee's total earnings are calculated as regular hours × regular rate, plus overtime hours × overtime rate. (p. 349) |
| T | Payroll taxes withheld represent a liability for an employer until payment is made to the government. (p. 351) |
| T | Employers are required to have a current Form W-4, Employee's Withholding Allowance Certificate, for all employees. (p. 352) |
| T | Federal income tax is one example of a payroll deduction. (p. 352) |
| T | The amount of income tax withheld from each employee's total earnings is determined from the number of withholding allowances and by the employee's marital status. (p. 352) |
| F | A single person will have less income tax withheld than a married employee earning the same amount. (p. 352) |
| F | The larger the number of withholding allowances claimed, the larger the amount of income tax withheld. (p. 352) |
| T | An employee can be exempt from having federal income tax withheld under certain conditions. (p. 352) |
| F | Social security tax is only paid by the employer. (p. 355) |
| T | An act of Congress can change the social security tax base and tax rate at any time. (p. 355) |
| T | When an employee's accumulated earnings exceed the tax base, no more social security tax is deducted. (p. 355) |
| T | Qualified retirement plans are approved by the Internal Revenue Service (p. 356) |
| T | Employee contributions to a 401(k) reduce the amount of earnings subject to payroll taxes. (p. 356) |
| F | The investment income of a 401(k) account is taxable to the employee in the year earned. (p. 356) |
| T | Taxes on the contributions and investment income of an IRA are deferred until the funds are withdrawn. (p. 356) |
| T | Contributions to a Roth IRA do not provide a current tax benefit. (p. 356) |
| F | The investment income in a Roth IRA is subject to federal income taxes when withdrawn. (p. 356) |
| T | The columns of the employee earnings record consist of the amount columns in a payroll register and an Accumulated Earnings column. (p. 360) |
| F | A check for each employee's total net pay is written on the general checking account of the business. (p. 364) |
| T | The original voucher check, with the voucher attached, is mailed to the vendor. (p. 365) |
| T | The voucher of a payroll check contains current pay period and year-to-date earnings and deduction information. (p. 365) |
| T | When EFT is used, the employee does not receive an individual check. (p. 366) |
