ACCT 401 - Chapter 12 fully
solved & updated
How are salaries and wages taxed? (Check all that apply.) - answer
They are taxed when received, rather than when earned.
They are subject to FICA tax.
They are taxed as ordinary income.
Which of the following statements is INCORRECT regarding the
timing of employer deductions for compensation and the employees'
inclusion of compensation in gross income? - answer Employers
must deduct the compensation the same year that the employees
include the amounts in gross income regardless of the accounting
method.
Employers are generally allowed to deduct reasonable
compensation paid to employees, but the level of deductible
compensation is limited to a maximum of $ for the CEO, CFO, and
the next three highest paid officers of publicly traded corporations
unless certain exceptions are met. - answer Blank 1: 1000000,
1,000,000, or 1 million
Which of the following choices is NOT an advantage of equity-based
compensation? - answer Equity-based compensation is exempt from
taxation for the employees.
Which of the following choices describes disadvantages to the
company of offering equity-based compensation in place of cash
compensation? (Check all that apply.) - answer There is an
opportunity cost of selling the stock to employees at a discounted
price rather than selling it for fair market value on the open market.
The number of shares outstanding increases which causes earnings
per share to be diluted.
, The type of compensation where employees receive a fixed amount
regardless of the amount of hours worked is called a(n) . The type of
compensation that is based on the number of hours worked is called
. Both types of compensation are taxed at to employees as income
and are subject to tax which includes Social Security and Medicare. -
answer Blank 1: salary or salaries
Blank 2: wages, hourly, or wage
Blank 3: ordinary or marginal
Blank 4: FICA
Which of the following statements is correct regarding employers'
treatment of salaries and wages? - answer Employers using the
accrual method of accounting must deduct salaries and wages in the
year the employees earn the compensation.
Which of the following statements is CORRECT regarding
compensation expense for employers in publicly traded
corporations? - answer Deductible compensation expense must be
considered reasonable under the facts and circumstances of the
employment.
compensation can provide motivational effects to employees and
cash flow benefits to the company. - answer equity-based
Which of the following choices is a characteristic of stock options? -
answer Employees may exercise their options by paying the strike
price to the employer anytime between the vesting and expiration
dates.
Which one of the following choices describes a disadvantage to the
company of offering equity-based compensation? - answer There is
an opportunity cost of selling the stock to employees at a
discounted price, rather than selling it for fair market value on the
market.
solved & updated
How are salaries and wages taxed? (Check all that apply.) - answer
They are taxed when received, rather than when earned.
They are subject to FICA tax.
They are taxed as ordinary income.
Which of the following statements is INCORRECT regarding the
timing of employer deductions for compensation and the employees'
inclusion of compensation in gross income? - answer Employers
must deduct the compensation the same year that the employees
include the amounts in gross income regardless of the accounting
method.
Employers are generally allowed to deduct reasonable
compensation paid to employees, but the level of deductible
compensation is limited to a maximum of $ for the CEO, CFO, and
the next three highest paid officers of publicly traded corporations
unless certain exceptions are met. - answer Blank 1: 1000000,
1,000,000, or 1 million
Which of the following choices is NOT an advantage of equity-based
compensation? - answer Equity-based compensation is exempt from
taxation for the employees.
Which of the following choices describes disadvantages to the
company of offering equity-based compensation in place of cash
compensation? (Check all that apply.) - answer There is an
opportunity cost of selling the stock to employees at a discounted
price rather than selling it for fair market value on the open market.
The number of shares outstanding increases which causes earnings
per share to be diluted.
, The type of compensation where employees receive a fixed amount
regardless of the amount of hours worked is called a(n) . The type of
compensation that is based on the number of hours worked is called
. Both types of compensation are taxed at to employees as income
and are subject to tax which includes Social Security and Medicare. -
answer Blank 1: salary or salaries
Blank 2: wages, hourly, or wage
Blank 3: ordinary or marginal
Blank 4: FICA
Which of the following statements is correct regarding employers'
treatment of salaries and wages? - answer Employers using the
accrual method of accounting must deduct salaries and wages in the
year the employees earn the compensation.
Which of the following statements is CORRECT regarding
compensation expense for employers in publicly traded
corporations? - answer Deductible compensation expense must be
considered reasonable under the facts and circumstances of the
employment.
compensation can provide motivational effects to employees and
cash flow benefits to the company. - answer equity-based
Which of the following choices is a characteristic of stock options? -
answer Employees may exercise their options by paying the strike
price to the employer anytime between the vesting and expiration
dates.
Which one of the following choices describes a disadvantage to the
company of offering equity-based compensation? - answer There is
an opportunity cost of selling the stock to employees at a
discounted price, rather than selling it for fair market value on the
market.
