Chapter 8, TEST 8A

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Chapter 8, TEST 8A

Name _________________________
Date _________________________
SCORING RECORD
Total Student
Section Possible Deductions Score
A 30
B 30
C 10
D 30
Total 100

Section A

DIRECTIONS: Each of the following statements is true or false.
Indicate your choice by writing in the Answers column T for a true
answer or F for a false answer. (2 points for each correct answer)
For
Answers Scoring
1. Payroll expenditures represent a small part of
the total expenditures of most companies. _____ _____
2. Federal, state, and local laws require employers
to maintain detailed and accurate payroll
accounting records. _____ _____
3. An employer works under the control and direction
of an employee. _____ _____
4. An example of a voluntary deduction is union dues. _____ _____
5. The Fair Labor Standards Act provides that all
employees covered by the act must be paid double
the regular rate for all hours worked over
40 hours in a week. _____ _____
6. An employee's total earnings before deductions
is called gross pay. _____ _____
7. The tax rates and the maximum amounts of earnings
subject to FICA taxes have been changed
frequently by Congress. _____ _____
8. Under federal law, employers are required to
withhold a percentage of the employee's wages
for Social Security and Medicare. _____ _____
9. Employers may use the wage-bracket method to
determine the amount of federal income tax to be
withheld from an employee's pay. _____ _____
10. FICA taxes include amounts for Social Security
and Federal Income Tax. _____ _____
11. The employee's earnings record is a summary of
the earnings of all employees for each pay period. _____ _____
12. The payroll register is a form used to assemble
data required at the end of each payroll period. _____ _____
13. The journal entry to record payroll for the
accounting period includes a debit to Wages
and Salaries Expense for the net pay. _____ _____
14. Electronic payroll systems are more efficient than
manual systems. _____ _____
8-2

15. When a direct deposit is made by the employer
to the employee's bank, the employee does not
handle the paycheck. _____ _____

Section B

Directions: Complete each of the following statements by writing in
the Answers column the letter of the word or words that correctly
completes each statement. (3 points each)
For
Answers Scoring

1. Any person who agrees to perform a service for
a fee and is not subject to the control of those
for who the service is performed is called a(n):
(A) manager; (B) employee; (C) independent
contractor; (D) executive; (E) none of these. _____ _____
2. An employee's earnings for a payroll period can
be based on: (A) the time worked; (B) units of
output; (C) sales volume; (D) A and C only;
(E) A, B, and C. _____ _____
3. Trevor Jones receives a regular salary of $800
a week and is entitled to overtime pay at the
rate of one and one-half times the regular hourly
rate for any time worked in excess of 40 hours
per week. Taylor's overtime hourly pay rate is:
(A) $41.54; (B) $45.00; (C) $27.69; (D) $30;
(E) $13.85. _____ _____
4. Ken Madison is paid one and one-half times
the regular hourly rate for all hours worked
in excess of 40 per week and double time for work
on Sunday. Ken's regular rate is $10 per hour.
During the week ended April 11, he worked 12 hours
each day from Monday through Friday, 8 hours on
Saturday, and 4 hours on Sunday. His total
earnings for the week, including overtime, is:
(A) $720; (B) $750; (C) $880; (D) $900;
(E) $1,040. _____ _____
5. Federal income tax that is withheld each pay
period from the employee's earnings is based on all
of the following except: (A) earnings of the
employee; (B) employee’s age; (C) number of
withholding allowances; (D)length of the pay
period; (E) marital status. _____ _____
6. Year to date earnings for Bob are $72,400. The
maximum earnings for Social Security is $76,200.
Current period earnings are $8,000. The amount of
current earnings subject to Social Security is:
(A) $8,000; (B) $3,800; (C) $4,200; (D) $72,400;
(E) none of these. _____ _____
7. A form used to assemble earnings, taxable
earnings, deductions, and net pay at the end of
each payroll period is a(n): (A) payroll
check; (B) employee's earnings record;
(C)payroll ledger; (D) payroll register;
(E) payroll card. _____ _____
8-3

8. The account that is credited for the Social
Security tax withheld from the employee's
earnings is: (A) Social Security Tax Expense;
(B) Social Security Tax Payable; (C)Payroll Taxes
Expense; (D) Payroll Expense; (E) Federal Tax
Expense. _____ _____
9. The payroll register for the week ended March 31,
for Finan's Typing Service indicates gross
payroll of $12,000 and payroll deductions of $2,000.
The journal entry for the payroll for this week
would include the following credit to cash:
(A) $12,000; (B) $14,000; (C) $10,000; (D) $2,000;
(E) none of these. _____ _____
10. Social Security Tax Payable and Medicare Tax
Payable are classified as: (A) owner’s equity;
(B) assets; (C) liabilities; (D) expenses;
(E) government costs. _____ _____

Section C

DIRECTIONS: Match the correct answer to the definition that best
explains it. (2 points each)

_____ 1. The employee does not handle the paycheck; payment is made
by the employer directly to the employee's bank.

_____ 2. Compensation for skilled or unskilled labor.

_____ 3. Compensation for managerial or administrative services.

_____ 4. A computer system based on a software package that performs
all payroll record keeping and prepares payroll checks.

_____ 5. Payroll system in which all records are prepared by hand.

A. manual system
B. electronic system
C. wages
D. salary
E. direct deposit

Section D

DIRECTIONS: Tobi's Tax Service has four employees who are paid on a
weekly basis, receiving time and one-half for working more than 40
hours in one week. The payroll data for the week ended May 31 is as
follows. Complete the payroll register. (30 points total)
8-4

NO. MARITAL TOTAL CUM. FED. INC.
NAME ALLOW STATUS HOURS RATE EARNINGS TAX
J. Adams 1 S 42 $ 16.00 $ 17,680.00 $ 120.00
K. Glass 0 S 39 $ 10.00 $ 15,600.00 $ 150.00
L. Jackson 2 M 40 $ 20.00 $ 18,720.00 $ 200.00

$600 per
M. Martin 4 M 40 week $ 12,000.00 $ 175.00

The cumulative earnings shown above are for the year through last week.
Social Security tax is withheld at 6.2% and Medicare tax at 1.45%.
Each employee who is married has $45 withheld for health insurance, and
each employee who is single has $15 withheld. Jackson has $10
deducted each pay period for U.S. Savings Bonds. Unemployment taxes
are paid on a maximum of $7,000 of earnings and the taxable amount has
been entered for you. Number the checks beginning with 602.
Total and verify the columns.

PAYROLL REGISTER
Earnings Taxable Earnings

Marital Unemploy Social
Name Allow Status Regular Overtime Total Cum. Total Comp Security
0.00
0.00
0.00
0.00

For the Period Ended
Soc. Health U.S. TOTAL
FIT Sec. Medicare Ins. BONDS DEDUCT. NET PAY CK. NO.
602
603
604
605