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Employee Net Pay & Pay Methods Exam, Exams of Business Finance

California State Polytechnic University (CPP) - PomonaBusiness Finance

The key concepts and questions related to employee net pay and pay methods, including topics such as mandatory and voluntary deductions, federal income tax calculations, fica taxes, state taxes, post-tax deductions, pay methods like cash, checks, direct deposit, and paycards, as well as indicators of payroll fraud. Detailed explanations and step-by-step examples to help students understand the various aspects of employee net pay and payroll processing. It could be useful as study notes, lecture notes, or a summary for an accounting, payroll, or human resources course at the university level.

Typology: Exams

2024/2025

Available from 10/12/2024

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ACC 105 Chapter 5 Smart book:
Employee Net Pay & Pay Methods Exam
with Answers.
1. Once the employer has computed the employee's gross pay, the
next step is: - ✔✔to deducted mandatory, voluntary, and mandated
amounts
2. After computing employee gross pay, the next step is to: -
✔✔subtract pre-tax deductions
3. Daniel is a new employee looking at contributing to a 401(k) offered
through the company. How will his contributions affect his tax
liability? - ✔✔-No change to FICA tax liability
-Lower federal income tax
4. The purpose for using grossed-up pay is to: - ✔✔-Satisfy tax liabilities
-Achieve a predetermined net pay
5. The employer's role in federal income taxes is: - ✔✔-depositor
-reporter
-collector
6. Mandatory tax deductions for all employees include the following: -
✔✔-Medicare taxes
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ACC 105 Chapter 5 Smart book:

Employee Net Pay & Pay Methods Exam

with Answers.

  1. Once the employer has computed the employee's gross pay, the next step is: - ✔✔to deducted mandatory, voluntary, and mandated amounts
  2. After computing employee gross pay, the next step is to: - ✔✔subtract pre-tax deductions
  3. Daniel is a new employee looking at contributing to a 401(k) offered through the company. How will his contributions affect his tax liability? - ✔✔-No change to FICA tax liability
    • Lower federal income tax
  4. The purpose for using grossed-up pay is to: - ✔✔-Satisfy tax liabilities
    • Achieve a predetermined net pay
  5. The employer's role in federal income taxes is: - ✔✔-depositor
    • reporter
    • collector
  6. Mandatory tax deductions for all employees include the following: - ✔✔-Medicare taxes
  • ederal income taxes
  • Social Security taxes
  1. Put the list in the correct processing order: - ✔✔1. Determine Gross Pay
  2. Determine Pre-Tax Deductions
  3. Determine Federal Withholding Taxes
  4. Determine Post-Tax Deductions
  5. George had gross wages of $1,000, 401(k) deduction equal to 15% of gross wages and health insurance of $50. George's taxable income is $_. - ✔✔$ (1,000 x .15 = 150 150 + 50 = 200 1,000 - 200 = 800)
  6. An employee earns $4,000 per week and contributes $150 to their 401(k) plan and $75 to United Way, a charity. What is the employee's FICA taxes for the period? - ✔✔$ ($4,000 x (.062 + .0145) = $ Social Security Tax Rate = 6. Medicare Tax Rate = 1.45)
  7. During the first step of determining grossed-up pay, what computation must occur? - ✔✔Compute the total percentage of mandatory taxes
  1. True or False: The wage-bracket method is useful for manual payroll preparation because the process of federal tax withholding is an absolute amount that will match the year-end tax forms. - ✔✔False
  2. What item(s) was/were new on the Form 2020 W-4? - ✔✔Dependents under 17
  3. When would an employee want to have additional taxes withheld by their employer? - ✔✔-When the employee has more than one job.
    • When the employee has additional income for which no income tax is withheld.
  4. When using the wage-brack method in Publication 15-t, the payroll clerk identifies the: - ✔✔-taxable income
    • marital status
  5. Manual calculations of payroll taxes using the wage-bracket method would: - ✔✔estimate the amount for year end
  6. Under the percentage method, place the items in calculation order: - ✔✔1. Gross Pay
    1. Federal Taxable Wages
    2. Withholding Allowance Deduction
    3. Tiered Tax Rate
  1. Which of the following are types of taxes employers would match? - ✔✔-Social Security taxes
    • Medicare taxes
  2. Which of the following are NOT determinates of federal withholding taxes on Form W-4 from 2019 or prior years? - ✔✔-Job classification
    • Net pay
  3. To determine taxes to withhold using the __ method, the payroll clerk may use Publication 15-T. - ✔✔Wage-Bracket
  4. In 2020, Social Security taxes are calculated with a wage base of: - ✔✔$137,
  5. When using the wage-bracket method the payroll accountant needs to know: - ✔✔-exemptions
    • marital status
  6. The percentage method calculates withholding amounts based upon: - ✔✔tiered income level
  7. Which of the following is true about the Social Security wage base? - ✔✔-It usually changes annually
  1. In 2020, Social Security taxes have a maximum wage base of_. - ✔✔$137,
  2. The combined maximum Medicare tax rate for an individual earning more than $200,000 annually would be _. - ✔✔2.35% (1.45% + 0.9% = 2.35%)
  3. The wage based for the additional Medicare tax is determined by the information on the employee's _. - ✔✔W- 4
  4. The following is true about state taxes on employees earnings: - ✔✔-States tax rates may vary by wage levels.
    • State taxes follow similar guidelines as federal taxes.
    • States may apply a variety of additional taxes.
  5. True or False: Most states have a state income tax. - ✔✔True
  6. An employer must withhold state income taxes when: - ✔✔The state in which they operate has a state income tax
  7. Occupational privilege taxes may be imposed by: - ✔✔local governments
  8. Post-tax deductions: - ✔✔reduce employee net pay
  1. Charitable contributions are: - ✔✔-deducted post-tax
    • reported on the employee's itemized tax return
  2. If a firm operates in multiple states, state __ requirements may become more complex. - ✔✔Income Tax
  3. Which of the following is correct regarding employer's withholding of state taxes: - ✔✔the amount must be based on all wages earned within their state
  4. The maximum garnishment for an employee is determined on: - ✔✔disposable income
  5. Information on local (city or county) taxes can be found through: - ✔✔-city revenue department
    • county revenue department
  6. Post-tax deductions are comprised of: - ✔✔-mandatory withholdings
    • voluntary withholdings
  7. Charitable contributions are: - ✔✔paid by the employee and remitted by the employer
  1. The repayment by an employee of an advance is treated as a _-tax deduction. - ✔✔Post-tax
  2. Which controls would improve accountability in cash payroll systems? - ✔✔Signed receipts
  3. When an employer pays with cash, what information should the pay advice contain? - ✔✔-Deductions
    • Gross pay
    • Net pay
  4. What are advantages of paying employees by check? - ✔✔- Improved traceability
    • Simplicity of accounting records
  5. Define escheatment. - ✔✔Leaving a check uncashed
  6. The __ may be liable for payroll check fraud until such activity is proven. - ✔✔Check Issuer
  7. Employees may choose to use direct deposit to: - ✔✔-decrease wait time for access to their payroll
    • avoid losing the paycheck
    • avoid going to the bank
  1. When using direct deposit, a best practice is to grant employees access to an __ to view their pay advice. - ✔✔Online Portal
  2. When would a company use paycards for the payment of employees? - ✔✔-If they have traveling workers
    • Large number of employees that do not have bank accounts
  3. Employers issuing paper checks to employees should: - ✔✔-use a dedicated payroll account
    • maintain an unclaimed property account
    • ensure sufficient funds are in the bank account
  4. Which of the following are potential indicators of payroll fraud? - ✔✔-Handwritten additions to the paycheck
    • Changes in font type
    • Absence of the bank's or the recipient's address
  5. True or false: Paycards may be accessed anywhere that credit cards are accepted. - ✔✔True
  6. Employers may choose to use direct deposit to avoid: - ✔✔Lost Paychecks
  1. _ is a type of cryptocurrency that has gained popularity. - ✔✔Bitcoin or Ethereum