SUA EXAM CHAPTER #5 Q&A
Control objectives of the payroll cycle - ANSWER-1. All employee hires are
What is withheld from a paycheck? - ANSWER-1. Federal, state and city tax
withholdings are based on information (martial status, number of exemptions, etc.) in
the employee's W-4 and gross pay.
2. FICA (Federal Insurance Contributions Act) Payroll Taxes are 7.65% of gross
wages and consists of:
-Social security tax or Old Age, Survivors and Disability Insurance (OASDI) for 2014
is 6.2% on wages up to $118,500/year (for 2015), or a maximum of $7,347
-Medicare tax is 1.45% of gross wages with no limitation
additional 0.9% tax is levied on wages above $200,000/year.
3. Other possible deductions are medical and dental insurance, life insurance,
flexible spending accounts, 401K retirement plan, etc.
What is the payroll journal? - ANSWER-the journal for recording payroll
disbursements. It frequently has separate columns to indicate regular pay, overtime
pay, each type of withholding, net pay, check number and account classification
What does the employee earnings subsidiary ledger show? - ANSWER-accumulated
payroll information for each employee
Cash Disbursement Economic Event:
Prepare and distribute payroll checks - ANSWER--Usually one day prior to when
employees are paid, the payroll clerk will prepare the payroll checks.
-A payroll check is the document prepared to pay an employee for services
performed. The check is the net pay, after deducting withholding taxes and other
items such as medical and dental insurance, union dues etc.
-When the AP clerk issues the checks, he or she will typically record the check
number in the payroll journal and reference the check numbers in the cash
disbursement journal
Cash Disbursement Economic Event:
Calculate and pay employer payroll taxes and fringe benefits - ANSWER--Payroll
taxes are taxes (FICA, Medicare, Unemployment, etc.) the company must pay for
employing individuals in the U.S. (and the particular state).
-Employers are required to match Social Security (FICA) and Medicare taxes paid
the employee. The federal government will receive 15.3% of the employee's gross
wages: 7.65% withheld from the employee's paycheck and 7.65% is an expense to
the company.
-Employers are also required to pay federal and state unemployment taxes (FUTA)
and (SUTA) on the first $7,000 of wages paid to covered employees.
-Use the General Journal to record employer payroll tax journal entries.
Control objectives of the payroll cycle - ANSWER-1. All employee hires are
What is withheld from a paycheck? - ANSWER-1. Federal, state and city tax
withholdings are based on information (martial status, number of exemptions, etc.) in
the employee's W-4 and gross pay.
2. FICA (Federal Insurance Contributions Act) Payroll Taxes are 7.65% of gross
wages and consists of:
-Social security tax or Old Age, Survivors and Disability Insurance (OASDI) for 2014
is 6.2% on wages up to $118,500/year (for 2015), or a maximum of $7,347
-Medicare tax is 1.45% of gross wages with no limitation
additional 0.9% tax is levied on wages above $200,000/year.
3. Other possible deductions are medical and dental insurance, life insurance,
flexible spending accounts, 401K retirement plan, etc.
What is the payroll journal? - ANSWER-the journal for recording payroll
disbursements. It frequently has separate columns to indicate regular pay, overtime
pay, each type of withholding, net pay, check number and account classification
What does the employee earnings subsidiary ledger show? - ANSWER-accumulated
payroll information for each employee
Cash Disbursement Economic Event:
Prepare and distribute payroll checks - ANSWER--Usually one day prior to when
employees are paid, the payroll clerk will prepare the payroll checks.
-A payroll check is the document prepared to pay an employee for services
performed. The check is the net pay, after deducting withholding taxes and other
items such as medical and dental insurance, union dues etc.
-When the AP clerk issues the checks, he or she will typically record the check
number in the payroll journal and reference the check numbers in the cash
disbursement journal
Cash Disbursement Economic Event:
Calculate and pay employer payroll taxes and fringe benefits - ANSWER--Payroll
taxes are taxes (FICA, Medicare, Unemployment, etc.) the company must pay for
employing individuals in the U.S. (and the particular state).
-Employers are required to match Social Security (FICA) and Medicare taxes paid
the employee. The federal government will receive 15.3% of the employee's gross
wages: 7.65% withheld from the employee's paycheck and 7.65% is an expense to
the company.
-Employers are also required to pay federal and state unemployment taxes (FUTA)
and (SUTA) on the first $7,000 of wages paid to covered employees.
-Use the General Journal to record employer payroll tax journal entries.
