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- 1. Multiple Choice
Gross pay is the total amount of salary, wages, commissions, and bonuses earned by an employee.
True
False
- 2. Multiple Choice
Which of the following principles says that warranty expense must be claimed in that pay period?
Matching Principle
Revenue Recognition Principle
Full Disclosure Principle
Conservatism Principle
- 3. Multiple Choice
Which of the following are NOT required to be deducted from employees' paychecks?
State Income Tax
Federal Income Tax
Charitable Contributions
FICA Tax
- 4. Multiple Choice
Estimated warranty payable would be included in the liability section of the balance sheet.
True
False
- 5. Multiple Choice
Which of the following is TRUE of a contingent liability?
It is an actual liability that is difficult to estimate.
It is a potential liability that depends on a future event.
It is an actual liability that depends on a past event.
It is a liability resulting from a lawsuit settled in court.
- 6. Multiple Choice
Which of the following is a major control risk in the payroll area?
Fictitious persons cashing paychecks
Expenses being recorded as assets in order to change earnings
Contracts being awarded to relatives of employees
Theft of inventory by staff
- 7. Multiple Choice
Which of the following is a control procedure to prevent fictitious persons cashing checks?
Keeping computerized records of payroll data
Requiring photo IDs for employees picking up their paychecks
Serial numbering of paychecks
Having employees clock in and out of work
- 8. Multiple Choice
Which of the following is paid by the employee ONLY?
State Unemployment Tax (SUTA)
FICA
Employee Income Tax
Federal Unemployment Tax (FUTA)
- 9. Multiple Choice
The entry to estimate warranty payable includes a credit to Warranty expense.
True
False
- 10. Multiple Choice
Which of the following is included in the entry to record estimated warranty payable?
A debit to Estimated Warranty Payable
A credit to Warranty Expense
A credit to Inventory
A credit to Estimated Warranty Payable
- 11. Multiple Choice
What is the tax rate for FICA (Social Security)?
5.4%
.8%
100%
7.65%
- 12. Multiple Choice
Payroll tax exp. includes FICA taxes, state unemployment taxes, and federal unemployment taxes.
True
False
- 13. Multiple Choice
What is the tax rate for State Unemployment Tax (SUTA)?
5.4%
.8%
100%
7.65%
- 14. Multiple Choice
What is the tax rate for Federal Unemployment Tax (FUTA)?
5.4%
.8%
100%
7.65%
- 15. Multiple Choice
Which of the following is an important aspect of control over payroll?
Controls to screen potential employees for criminal records
Controls to limit salary to be less than competitors
Controls to monitor employee behavior like security cameras
Controls for efficiency in payroll procedures
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