Basics of Payroll Accounting Flashcard

Front

What is the primary reason payroll accounting isn't just a simple transaction of debiting wage expense and crediting cash?

Back

Due to various withholdings and taxes

Front

Which tax is included in FICA?

Back

Social Security and Medicare

Front

What is the purpose of withholding taxes from an employee's salary?

Back

To ensure government receives due taxes

Front

What might trigger a garnishment of an employee's wages? Options: Employee requesting advance salary, Company financial losses, Legal obligations like child support, Performance bonuses

Back

Legal obligations like child support

Front

What happens to the garnished amount from an employee's wages?

Back

Paid to another party due to legal obligations

Front

What is the effect of garnishments on an employee's net pay?

Back

Reduces the net pay

Front

How many journal entries are typically made to account for an employee's salary? Options: One, Four, Three, Two

Back

Two

Front

What is the main reason for breaking down payroll accounting into multiple journal entries?

Back

To simplify understanding and tracking

Front

What is the net amount an employee receives if their salary is $2000 but has $300 federal tax and $153 FICA withheld?

Back

$1547

Front

What role does the employer play in handling the taxes withheld from an employee's salary?

Back

They act as an intermediary, remitting withheld taxes to the government