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Account/Business Analysis/Financial Reporting MCQs

UNIT-3
2) To compute FICA-OASDI tax to be withheld:
A) use net earnings and Form W-4.
B) use gross earnings, number of allowances, and marital status.
C) use the net earnings and number of allowances.
D) None of these answers are correct.

4) Wendy Nelson works 48 hours as a graphic designer. Compute her weekly pay. Her hourly rate of pay is $25.00 per hour.
A) $1,000
B) $1,300
C) $1,500
D) $1,100

5) Currently the FUTA is:
A) .8% with a base limit of $7,000.
B) 6.2% with a base limit of $76,200.
C) 5.4% with a base limit of $76,200.
D) 5.4% with a base limit of $7,000.

6) Marcy's cumulative earnings before this pay period were $6,200, and gross for the week is $500. How much of this week's pay is subject to taxes for SUTA and FUTA? The rates for SUTA is 5.4% and FUTA is 0.8% with a base of $7,000.
A) $300
B) $0
C) $6,700
D) $500 Unit

7) For which of the following taxes is there no ceiling on the amount of employee annual earnings subject to the tax?
A) Federal Unemployment Tax
B) FICA-Social Security
C) FICA-Medicare
D) State Unemployment Tax

8) For which of the following taxes is there a ceiling on the amount of employee annual earnings subject to the tax?
A) FICA-social security
B) State unemployment taxes
C) Federal unemployment taxes
D) All of these answers are correct.

10) Jake's earnings during the month of March were $1,500. His earnings for the year prior to March were $5,500. Jake's employer is subject to state unemployment of 2.0% and federal unemployment taxes of 0.8% on the first $7,000. The employer's unemployment payroll tax expense for March is:
A) $36.40.
B) $56.40.
C) $154.00
D) $42. Unit

11) Bay Online Auction's payroll for July includes the following data:
Gross salaries $40,000
Salaries subject to FICA:
6.2% Social Security 35,000
1.45% Medicare 40,000
Salaries subject to:
0.8% FUTA 2,000
2.0% SUTA 2,000
The employer's payroll tax for the period would be:
A) $2,806.
B) $2,226.
C) $3,206.
D) $2,096.

12) The account for Payroll Tax Expense includes all of the following except:
A) federal income tax.
B) unemployment taxes for the year to date.
C) employer payroll taxes for the year to date.
D) FICA taxes (Social Security and Medicare) paid by the employer for the latest payroll period.

13) Which of the following statements is false?
A) Payroll Tax Expense is an expense account.
B) FICA-Social Security Tax Payable increases on the credit side of the account.
C) SUTA Tax Payable increases on the debit side of the account.
D) Payroll Tax Expense increases on the debit side of the account.

14) The 941 taxes include:
A) property tax.
B) FUTA.
C) SUTA.
D) FICA.

15) Form 8109 is:
A) sent directly to the IRS.
B) a federal tax deposit coupon.
C) used when paying SUTA tax.
D) All of these answers are correct.

16) Which form is used to report FICA taxes for the employer and employee, and also federal
income taxes for the employee?
A) Form 941
B) Form W-4
C) Form 940EZ or Form 940
D) None of these answers are correct.

18) How often is a 940 filed?
A) Quarterly
B) Annually
C) During an eight-month period
D) All of these answers are correct.

22) Which of the following statements about subsidiary ledgers is most accurate?
A) The subsidiary ledger accounts will equal the amount in the Sales account.
B) The subsidiary ledger accounts will never equal the control account in the general ledger.
C) The accounts receivable ledger is a book of accounts that provides supporting detail for
Accounts Receivable.
D) All of these answers are correct.

25) Collected from a charge customer: This will be recorded with:
A) a credit to a liability account.
B) a credit to an owner's equity account.
C) a credit to an asset account.
D) None of these are correct.

Solution Preview

Assistance with your study questions:

2) To compute FICA-OASDI tax to be withheld:
A) use net earnings and Form W-4.
B) use gross earnings, number of allowances, and marital status.
C) use the net earnings and number of allowances.
D) None of these answers are correct. <-- gross earnings up to OASI gross wage ceiling.

4) Wendy Nelson works 48 hours as a graphic designer. Compute her weekly pay. Her hourly rate of pay is $25.00 per hour.
- so she would receive 25 x 40 + 8 x 37.50 = 1300
A) $1,000
B) $1,300 <-- see calculation.
C) $1,500
D) $1,100

5) Currently the FUTA is:
A) .8% with a base limit of $7,000. <-- this is correct. It just increased from .6 to .8. This is federal unemployment.
B) 6.2% with a base limit of $76,200.
C) 5.4% with a base limit of $76,200.
D) 5.4% with a base limit of $7,000.

6) Marcy's cumulative earnings before this pay period were $6,200, and gross for the week is $500. How much of this week's pay is subject to taxes for SUTA and FUTA? The rates for SUTA is 5.4% and FUTA is 0.8% with a base of $7,000.
SUTA = 9,000 FUTA = 7,000. She's under the ceiling for both.

A) $300
B) $0
C) $6,700
D) $500 Unit <-- Correct

7) For which of the following taxes is there no ceiling on the amount of employee annual earnings subject to the tax?
A) ...

Solution Summary

This solution provides the correct answers with supporting calculations and explanations where needed, to the financial reporting/payroll/business multiple choice questions listed.

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