PAYROLL ACCOUNTING 35TH EDITION
ACTUAL EXAM QUESTIONS AND CORRECT
ANSWERS
◉ Employees' Earnings Records.
Answer: Each piece of data is used in multiple ways
Pay disbursement
Wage and Salary increases
Changes to marital status
Data on this form facilitates computations for taxes with maximum
caps (e.g., FUTA, Social Security)
◉ Connection of the Employees' Earnings Records to Periodic Tax
Reports.
Answer: Amounts listed on Employees' Earnings Records are used to
facilitate computations and to verify accuracy of Form 941, 940, 944,
and W-2/W-3.
Employees' Earnings Records serve as an audit trail.
May be used to re-create payroll data in the event of computer
failure or a catastrophic event
,◉ Payroll-Related General Journal Entries.
Answer: The record of all of a firm's financial transactions
Maintained in chronological order
One big T-account that uses Dr. and Cr.
- Columns to record the Debits and Credits associated with each
transaction
◉ General Journal Conventions.
Answer: - The date of the transaction is attached.
- The Debit part of the transaction is on the first line and is flush-left
in the column.
- The Credit part of the transaction is on the second line and is
indented slightly.
- A brief description of the transaction is on line three.
- Account numbers are annotated in the Post Reference column
◉ Payroll Accruals and Reversals.
Answer: Payroll may be split between two months
Need to reflect the accrued payroll due but not paid and match the
expenses to the correct period
, Create adjusting entry
◉ General Ledger Posting Practices.
Answer: Each line has a date
Description only used for adjusting, closing, and reversing entries
Post Reference is a combination of letters and numbers that denotes
data source
First pair of Dr. and Cr. are used to record General Journal entry
Second pair of Dr. and Cr. are used to update account balance
◉ Payroll Effects on the Accounting System.
Answer: Payroll reflects a business expense
Reduces profitability in proportion to wages paid
Payroll expenses must be allocated to correct accounts and
departments
Bulk of accountant's work is considered a business overhead cost
Not traceable to a single department
◉ Accounting Reports.
Answer: Income Statement
- Shows revenue and expenses of the firm
ACTUAL EXAM QUESTIONS AND CORRECT
ANSWERS
◉ Employees' Earnings Records.
Answer: Each piece of data is used in multiple ways
Pay disbursement
Wage and Salary increases
Changes to marital status
Data on this form facilitates computations for taxes with maximum
caps (e.g., FUTA, Social Security)
◉ Connection of the Employees' Earnings Records to Periodic Tax
Reports.
Answer: Amounts listed on Employees' Earnings Records are used to
facilitate computations and to verify accuracy of Form 941, 940, 944,
and W-2/W-3.
Employees' Earnings Records serve as an audit trail.
May be used to re-create payroll data in the event of computer
failure or a catastrophic event
,◉ Payroll-Related General Journal Entries.
Answer: The record of all of a firm's financial transactions
Maintained in chronological order
One big T-account that uses Dr. and Cr.
- Columns to record the Debits and Credits associated with each
transaction
◉ General Journal Conventions.
Answer: - The date of the transaction is attached.
- The Debit part of the transaction is on the first line and is flush-left
in the column.
- The Credit part of the transaction is on the second line and is
indented slightly.
- A brief description of the transaction is on line three.
- Account numbers are annotated in the Post Reference column
◉ Payroll Accruals and Reversals.
Answer: Payroll may be split between two months
Need to reflect the accrued payroll due but not paid and match the
expenses to the correct period
, Create adjusting entry
◉ General Ledger Posting Practices.
Answer: Each line has a date
Description only used for adjusting, closing, and reversing entries
Post Reference is a combination of letters and numbers that denotes
data source
First pair of Dr. and Cr. are used to record General Journal entry
Second pair of Dr. and Cr. are used to update account balance
◉ Payroll Effects on the Accounting System.
Answer: Payroll reflects a business expense
Reduces profitability in proportion to wages paid
Payroll expenses must be allocated to correct accounts and
departments
Bulk of accountant's work is considered a business overhead cost
Not traceable to a single department
◉ Accounting Reports.
Answer: Income Statement
- Shows revenue and expenses of the firm
