Question 1

The amount of federal income tax decreases as the number of allowances increases.

Accepted Answer

A) True 
 B)False

Question 2

Social Security tax has a wage base, which is the minimum amount an employee must earn before they will have the Social Security tax deduction.

Accepted Answer

A) True 
 B)False

Question 3

Which payroll-speciﬁc tool is used to facilitate computation of net pay?

Accepted Answer

A) Payroll Register 
B) Form I-9 
C) Employee Information Form 
D) Supervisor Payroll Report

Question 4

State and Local Income Tax rates _______ .

Accepted Answer

A) are paid by the employer to the Federal government 
B) differ among states and localities 
C) are mandated by Federal law 
D) exist at the same level in every state

Question 5

How are income taxes and FICA taxes applied to gross-up pay? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

Accepted Answer

A) Subtract the sum of the income tax rate and FICA tax rate from 100 percent. 
B) Compute the sum of the income tax and FICA tax rates. 
C) Divide the net pay by the net tax rate. 
D) Multiply the gross pay by the sum of the income tax and FICA tax rates.

Question 6

What is a disadvantage to using paycards as a method of transmitting employee compensation?

Accepted Answer

A) Ease of paying traveling employees. 
B) Convenience of retrieving pay disbursements. 
C) Acceptance of paycards at many locations. 
D) Potential withdrawal and point-of-sale limitations.

Question 7

Which of the following is used in the determination of the amount of federal income tax to be withheld from an employee per pay period? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

Accepted Answer

A) Date of birth 
B) Period salary 
C) Marital status 
D) Prior year's tax return

Question 8

The annual payroll tax guide that the IRS distributes is called _____.

Accepted Answer

A) The IRS tax guide 
B) Publication 15 
C) Circular 15 
D) Publication E

Question 9

The factors that determine an employee's federal income tax are _______.

Accepted Answer

A) Pay frequency, number of dependents, taxable pay, and marital status 
B) Marital status, birth date, taxable pay, and pay frequency 
C) Number of children, pay frequency, marital status, and gross pay 
D) Marital status, number of withholdings, taxable pay, and pay frequency

Question 10

Nickels Company is located in West Virginia has employees who live in Ohio, Florida, Tennessee, and West Virginia. For which state(s) should the company collect and remit state income tax? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

Accepted Answer

A) Florida 
B) Ohio 
C) West Virginia 
D) Tennessee

Question 11

The purpose of paycards as a pay method is to _______ .

Accepted Answer

A) promote debit card use as a means of economic stimulus 
B) prevent employees from opening bank accounts 
C) protect payroll processes against embezzlement 
D) promote accessibility and portability of employee compensation

Question 12

A ﬁrm has headquarters in Indiana but has oﬃces in California and Utah. For employee taxation purposes, it may choose which of those three states income tax laws it wishes to use.

Accepted Answer

A) True 
 B)False

Question 13

The regular Medicare tax deduction is 1.45% for employee and employer and must be paid by all employees.

Accepted Answer

A) True 
 B)False

Question 14

Which body issued Regulation E to protect consumers from loss of deposited funds?

Accepted Answer

A) Department of Homeland Security 
B) Internal Revenue Service 
C) American Banking Association 
D) Federal Deposit Insurance Corporation

Question 15

Which of the following payment methods is growing in popularity among employees?

Accepted Answer

A) Check 
B) Paycard 
C) Cash 
D) Direct Deposit

Question 16

The percentage method of determining an employee's Federal income tax deductions _______ .

Accepted Answer

A) allows payroll accountants to determine Federal income tax for the ﬁrm itself 
B) is used to promote complexity in payroll practices 
C) is less accurate than the results gained from using the wage-bracket method 
D) is used primarily for high wage earners and computerized payroll programs

Exam 5: Unemployment Compensation Taxes

The amount of federal income tax decreases as the number of allowances increases.

Social Security tax has a wage base, which is the minimum amount an employee must earn before they will have the Social Security tax deduction.

Which payroll-speciﬁc tool is used to facilitate computation of net pay?

State and Local Income Tax rates _______ .

What is a disadvantage to using paycards as a method of transmitting employee compensation?

The annual payroll tax guide that the IRS distributes is called _____.

The factors that determine an employee's federal income tax are _______.

The purpose of paycards as a pay method is to _______ .

A ﬁrm has headquarters in Indiana but has oﬃces in California and Utah. For employee taxation purposes, it may choose which of those three states income tax laws it wishes to use.

The regular Medicare tax deduction is 1.45% for employee and employer and must be paid by all employees.

Which body issued Regulation E to protect consumers from loss of deposited funds?

Which of the following payment methods is growing in popularity among employees?

The percentage method of determining an employee's Federal income tax deductions _______ .