Payroll Accounting 2016 26th Edition by Bieg Test Bank

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Payroll Accounting 2016 26th Edition by Bieg Test Bank

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WITH ANSWERS
Payroll Accounting 2016 26th Edition by Bieg Test Bank

chapter 5

1. Unemployment taxes (FUTA and SUTA) do not have to be paid by an employer who has only part-time employees.

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

2. The Social Security Act ordered every state to set up an unemployment compensation program.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1

 

3. Partnerships do not have to pay unemployment taxes on the wages of their employees.

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

4. Once a company attains the status of employer for FUTA purposes, that status continues for four calendar years.

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

5. A traveling salesperson who solicits and transmits to the principal orders for merchandise for resale is considered an employee under FUTA.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1

 

6. Services performed by a child under the age of 21 for a parent-employer are excluded from FUTA coverage.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1

 

7. Services performed in the employ of a religious organization that is exempt from federal income tax are also exempt from FUTA coverage.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1

 

8. Directors of corporations who only attend and participate in board of directors meetings are not covered as employees under FUTA.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1

 

9. Insurance agents paid solely on a commission basis are not considered employees under FUTA.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1

 

10. If an employee works in more than one state, the employer must pay a separate SUTA tax to each of those states in which the employee earns wages.

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

11. For FUTA purposes, the cash value of remuneration paid in any medium other than cash is not considered taxable wages.

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

12. Advance payments for work done in the future are not taxable wages for FUTA purposes.

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

13. FUTA and SUTA coverages extend to U.S. citizens working abroad for American employers.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1

 

14. In the case of a part-time employee, the employer pays a FUTA tax on only the first $3,500 of earnings (one-half the regular limit).

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

15. Christmas gifts, excluding noncash gifts of nominal value, are taxable wages for unemployment purposes.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1

 

16. Retirement pay is taxable wages for FUTA purposes.

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

17. Educational assistance payments made to workers to improve skills required of their jobs are nontaxable for unemployment purposes.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1

 

18. If an employee has more than one employer during the current year, the taxable wage base applies separately to each of those employers, unless one employer has transferred the business to the second.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1

 

19. Every employer is entitled to a 5.4 percent credit against the gross FUTA tax of 6.0 percent.

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

20. For FUTA purposes, an employer must pay a higher FUTA tax rate on executives than on nonsupervisory personnel.

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

21. In order to obtain the maximum credit allowed against the federal unemployment tax, the employer must have paid its SUTA contributions by the due date of Form 940.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1

 

22. Even if a state repays its Title XII advances, all employers in that state are subject to a credit reduction in the year of the advance.

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

23. If an employer is subject to a credit reduction because of Title XII advances, the penalty for the entire year will be paid only with the deposit for the last quarter of the year.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1

 

24. There is a uniform rate of unemployment benefits payable by all states.

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

25. If an employer pays unemployment taxes to two states, it will have the same SUTA tax rate in both states.

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

26. Currently, none of the states imposes an unemployment tax on employees.

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

27. In some states, employers may obtain reduced unemployment compensation rates by making voluntary contributions to the state fund.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1

 

28. Dumping is legal in all but a few states.

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

29. On Form 940, even if the total FUTA tax is more than $500, there is no listing of quarterly federal unemployment tax liabilities.

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

30. Form 940 must be mailed to the IRS by January 15.

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

31. The mailing of Form 940 is considered timely if it is postmarked on or before the due date.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1

 

32. If an employers quarterly tax liability is $525, it must be paid on or before the last day of the month following the end of the quarter.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1

 

33. FUTA tax deposits cannot be paid electronically.

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

34. Schedule A of Form 940 only has to be completed by employers who are subject to the Title XII credit reduction.

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

35. If a company is liable for a credit reduction (due to Title XII advance), this extra tax must be paid along with each of the required deposits made during the year.

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

36. An employer can use a credit card to pay the balance with Form 940 (under $500.)

  a. True
  b. False

 

ANSWER:   True
POINTS:   1

 

37. An employer can use a credit card to pay the quarterly deposit of FUTA taxes during the year.

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

38. Even if the duties of depositing the FUTA taxes and filing Form 940 have been outsourced, the employer is still the responsible party.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1

 

39. Unlike Form 941, there is no penalty for the late filing of Form 940.

  a. True
  b. False

 

ANSWER:   False
POINTS:   1

 

40. In most states, the contribution reports and the wage information reports are filed quarterly.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1

 

41. A federal unemployment tax is levied on:

  a. employees only.
  b. both employers and employees.
  c. employers only.
  d. government employers only.
  e. no one.

 

ANSWER:   c
POINTS:   1

 

42. For FUTA purposes, an employer can be any one of the following except:

  a. an individual.
  b. a partnership.
  c. a trust.
  d. a corporation.
  e. All of the above can be employers.

 

ANSWER:   e
POINTS:   1

 

43. Included under the definition of employees for FUTA purposes are:

  a. independent contractors.
  b. insurance agents paid solely on commission.
  c. student nurses.
  d. officers of a corporation.
  e. members of partnerships.

 

ANSWER:   d
POINTS:   1

 

44. Which of the following is not a factor considered in determining coverage of interstate employees?

  a. Location of base of operations
  b. Place where work is localized
  c. Location of companys payroll department
  d. Location of employees residence
  e. Location of place from which operations are controlled

 

ANSWER:   c
POINTS:   1

 

45. An aspect of the interstate reciprocal arrangement concerns:

  a. the status of Americans working overseas.
  b. the taxability of dismissal payments.
  c. the determination of an employers experience rating.
  d. the transfer of an employee from one state to another during the year.
  e. none of the above.

 

ANSWER:   d
POINTS:   1

 

46. Which of the following payments are taxable payments for federal unemployment tax?

  a. Christmas gifts, excluding noncash gifts of nominal value
  b. Caddy fees
  c. Courtesy discounts to employees and their families
  d. Workers compensation payments
  e. Value of meals and lodging furnished employees for the convenience of the employer

 

ANSWER:   a
POINTS:   1

 

47. Which of the following types of payments are not taxable wages for federal unemployment tax?

  a. Retirement pay
  b. Cash prizes and awards for doing outstanding work
  c. Dismissal pay
  d. Bonuses as remuneration for services
  e. Payment under a guaranteed annual wage plan

 

ANSWER:   a
POINTS:   1

 

48. If the employer is tardy in paying the state contributions, the credit against the federal tax is limited to what percent of the late payments that would have been allowed as a credit if the contributions had been paid on time?

  a. 6.2%
  b. 90%
  c. 5.13%
  d. 20%
  e. 0%

 

ANSWER:   b
POINTS:   1

 

49. Which of the following provides for a reduction in the employers state unemployment tax rate based on the employers experience with the risk of unemployment?

  a. Voluntary contribution
  b. Title XII advances
  c. Pooled-fund laws
  d. Experience-rating plan
  e. None of the above

 

ANSWER:   d
POINTS:   1

 

50. In order to avoid a credit reduction for Title XII advances, a state must repay the loans by:

  a. the end of the year of the loans.
  b. the end of the year the credit reduction is scheduled to take effect.
  c. the end of the third year after the year of the loans.
  d. November 10 of the year the credit reduction is scheduled to take effect.
  e. June 30 of the year after the loans.

 

ANSWER:   d
POINTS:   1

 

51. Voluntary contributions to a states unemployment department are:

  a. allowed in all states.
  b. designed to increase an employers reserve account in order to lower the employers contribution rate.
  c. capable of being paid at any time with no time limit.
  d. returned to the employer at the end of the following year.
  e. sent directly to the IRS.

 

ANSWER:   b
POINTS:   1

 

52. The person who is not an authorized signer of Form 940 is:

  a. the individual, if a sole proprietorship.
  b. the accountant from the companys independent auditing firm.
  c. the president, if a corporation.
  d. a fiduciary, if a trust.
  e. All of the above are authorized signers.

 

ANSWER:   b
POINTS:   1

 

53. If the employer has made timely deposits that pay the FUTA tax liability in full, the filing of Form 940 can be delayed until:

  a. December 31.
  b. February 15.
  c. February 10.
  d. February 1.
  e. March 31.

 

ANSWER:   c
POINTS:   1

 

54. When making a payment of FUTA taxes, the employer must make the payment by the:

  a. end of the month after the quarter.
  b. 15th of the month after the quarter.
  c. 10th of the month after the quarter.
  d. end of the following quarter.
  e. same day of the FICA and FIT deposits.

 

ANSWER:   a
POINTS:   1

 

55. An employer must pay the quarterly FUTA tax liability if the liability is more than:

  a. $3,000.
  b. $500.
  c. $1,000.
  d. $1.
  e. $100.

 

ANSWER:   b
POINTS:   1

 

Instruction 5-1

Use the net FUTA tax rate of 0.6% on the first $7,000 of taxable wages.

 

56. Refer to Instruction 5-1. Niemann Company has a SUTA tax rate of 7.1%. The taxable payroll for the year for FUTA and SUTA is $82,600.

a) The amount of FUTA tax for the year is __________.
b) The amount of SUTA tax for the year is __________.

 

ANSWER:  
a)  
b)  
POINTS:   1

 

57. Refer to Instruction 5-1. Stys Companys payroll for the year is $1,210,930. Of this amount, $510,710 is for wages paid in excess of $7,000 to each individual employee. The SUTA tax rate for the company is 3.2% on the first $7,000 of each employees earnings.

a) The amount of FUTA tax for the year is __________.
b) The amount of SUTA tax for the year is __________.

 

ANSWER:  
a)  
b)
POINTS:   1

 

58. Refer to Instruction 5-1. Michael Mirer worked for Dawson Company for six months this year and earned $11,200. The other six months he earned $6,900 working for McBride Company (a separate company). The amount of FUTA taxes to be paid on Mirers wages by the two companies is:

a) Dawson Company __________.
b) McBride Company __________.

 

ANSWER:  
a)
b)  
POINTS:   1

 

59. Refer to Instruction 5-1. John Gercke is an employee of The Woolson Company. During the first part of the year, he earned $6,800 while working in State A. For the remainder of the year, the company transferred him to State B where he earned $16,500. The Woolson Companys tax rate in State A is 4.2%, and in State B it is 3.15% on the first $7,000. Assuming that reciprocal arrangements exist between the two states, determine the SUTA tax that the company paid to:

a) State A __________.
b) State B __________.

 

ANSWER:  
a)  
b) [($7,000 $6,800) X 0.0315 = $6.30
POINTS:   1

 

60. Refer to Instruction 5-1. Aaron Norman earned $24,900 for the year from Marcus Company. The company is subject to a SUTA tax of 4.7% on the first $9,900 of earnings. Determine:

a) the employers FUTA tax on Normans earnings __________.
b) the employers SUTA tax on Normans earnings __________.

 

ANSWER:  
a) $7,000 X 0.006 = $42.00
b)  
POINTS:   1

 

61. Refer to Instruction 5-1. Ted Carman worked for Rivertide Country Club and earned $28,500 during the year. He also worked part time for Harrison Furniture Company and earned $12,400 during the year. The SUTA tax rate for Rivertide Country Club is 4.2% on the first $8,000, and the rate for Harrison Furniture Company is 5.1% on the first $8,000. Calculate the FUTA and SUTA taxes paid by the employers on Carmans earnings.

    FUTA SUTA
a. Riverside ______________ _____________
b. Harrison Furniture Company ______________ _____________

ANSWER:  
  FUTA SUTA
(a) Rivertide
Country Club
(b) Harrison
Furniture
Company
POINTS:   1

 

62. Refer to Instruction 5-1. Queno Company had FUTA taxable wages of $510,900 during the year. Determine its:

a) gross FUTA tax __________.
b) FUTA tax credits (assuming no penalties) __________.
c) net FUTA tax __________.

 

ANSWER:  
a)
b)
c)  
POINTS:   1

 

63. Refer to Instruction 5-1. Faruga Company had FUTA taxable payrolls for the four quarters of 2015 of $28,400; $19,600; $16,500; and $8,900, respectively. The company was located in a state that was subject to a FUTA credit reduction of 0.3%. What was the amount of Farugas first required deposit of FUTA taxes?

ANSWER:  
POINTS:   1

 

64. Refer to Instruction 5-1. Hunter Company had a FUTA taxable payroll of $192,700 for the year. Since the company is located in a state that has 0.3% FUTA credit reduction due to unpaid loans, determine Hunters FUTA tax liability for the year.

ANSWER:   [$192,700 X (0.6% + 0.3%)] = $1,734.30
POINTS:   1

 

65. Refer to Instruction 5-1. In the first quarter of the year, Henry Gibson earned $3,000 in wages and reported $2,400 in tips to his employer. How much would the employers FUTA tax be for the first quarter on Gibson?

ANSWER:  
POINTS:   1

 

66. In Part 5 of Form 940, Peterson Company reported FUTA tax liabilities as follows:

First quarter: $397.50
Second quarter: $209.10
Third quarter: $274.50
Fourth quarter: $262.20

List the amounts and the dates of each required FUTA tax payment:

amount $__________ date __________
amount $__________ date __________
amount $__________ date __________
amount $__________ date __________

 

ANSWER:  
amount date 7/31/year 1
amount date 1/31/year 2
amount   date  
amount   date  
POINTS:   1

 

67. Refer to Instruction 5-1. Sparks Companys SUTA rate for next year is 3.25% because its reserve ratio falls into the states 10% to less than 12% category [(contributions benefits paid) average payroll = $414,867 $3,521,790 = 11.78%]. If the next bracket (12% to less than 14%) would give the company a lower tax rate of 3.05%, what would be the least amount of the voluntary contribution needed to qualify the company for the 3.05% SUTA tax rate?

ANSWER:  
POINTS:   1

 

68. a.  Complete Part 2 of Form 940 based on the following information:

Total payroll for the year                                                   $913,590

Payroll to employees in excess of $7,000                         $421,930

Employer contributions into employees 401(k) plans        $23,710

 

Source: Internal Revenue Service

b.  If the employer is located in North Carolina, which has a credit reduction of 1.2%, what wuld be the amount of the credit reduction?

c. Complete Part 5 of Form 940 given the breakdown of FUTA taxable wages for the year to be:

 First quarter   $237,000
 Second quarter   $168,000
 Third quarter  $54,000
 Fourth quarter    $8,950
   Yearly total  $467,950

 

ANSWER:   a.

 

b.  (0.012 x $467,950) ..$5,615.40

c.

First quarter

First quarter

POINTS:   3

 

 

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