Accounting Fundamentals
Payroll Comprehensive
Questions (Frequently Most
Tested) with Verified Answers
what does payroll involve? - Answer: a company's recording of its employee's compensation such as:
wages, salaries, bonuses, commissions, withholding of payroll taxes (income taxes, social security taxes,
medicare taxes), withholdings of employees (health insurance premiums, contributions to savings
plans), employer's expense for taxes, and employer's expense for benefits (health insurance, dental
insurance, vision insurance, savings plan contributions)
is payroll an asset or liability? - Answer: liability
what is used in payroll accounting? - Answer: matching principle
what does the matching principle require? - Answer: a company to match expenses to the accounting
period in which the related revenues are reported (if there is not a direct connection between revenues
and expenses, the expense should appear on the income statement for the accounting period in which is
was incurred - expenses often occur in a different accounting period in which they are paid)
Kristen is hired by ABC Company to work a total of five days December 26 through December 30. On
December 30, Kristen turns in her time card and ABC Company gives her a check on the next scheduled
payday, January 15th. (matching principle) - Answer: the paycheck was issued in January, the matching
principle requires the expense to be reported in December when the work was completed
what is a salary? - Answer: a regular but fixed amount paid to an employee for working (before taxes
and deductions / gross amount)
how often are salaries paid? - Answer: usually semi-monthly (on the 15th and last days of the month) or
bi-weekly (every other Friday)
what is a salary typically referred to as? - Answer: a yearly sum (ex: $35,000 per year)
, describe salaried employees - Answer: they earn a specific annual amount, so the gross pay per pay
period is typically the same recurring amount
Brenda makes $72,000 per year and her salary is paid semi-monthly. What is her gross pay for each of
the 24 pay periods? - Answer: $3,000
who typically uses time cards? why? - Answer: wage earning employees to record their hours worked
what is a time card? - Answer: a document that records the amount of hours worked in a specific time
period
what does a time card include? - Answer: a starting time/date and ending time/date
what are wages? - Answer: regular payments to an employee made by an employer
do wages fluctuate? - Answer: they can fluctuate based on the number of hours or days an employee
works
how often are wages typically paid? - Answer: on an hourly or daily basis such as $15 per hour or $200
per day
how are wages determined? - Answer: by multiplying the employee's hourly or daily rate by the number
of hours or days worked (this figures the gross wage - wage prior to any deductions)
Kristen's pay rate for the five days she worked for ABC Company is $25.50 per hour. She worked seven
hours on each day. What is her gross wage? - Answer: $892.50 (25.5*35)
Adam's pay rate is $250 per day of work at ABC Company. He worked four days in March and 7 days in
April. What is the gross wage for March and April? - Answer: March: $1,000 (250*4), April: $1,750
(250*7)
Payroll Comprehensive
Questions (Frequently Most
Tested) with Verified Answers
what does payroll involve? - Answer: a company's recording of its employee's compensation such as:
wages, salaries, bonuses, commissions, withholding of payroll taxes (income taxes, social security taxes,
medicare taxes), withholdings of employees (health insurance premiums, contributions to savings
plans), employer's expense for taxes, and employer's expense for benefits (health insurance, dental
insurance, vision insurance, savings plan contributions)
is payroll an asset or liability? - Answer: liability
what is used in payroll accounting? - Answer: matching principle
what does the matching principle require? - Answer: a company to match expenses to the accounting
period in which the related revenues are reported (if there is not a direct connection between revenues
and expenses, the expense should appear on the income statement for the accounting period in which is
was incurred - expenses often occur in a different accounting period in which they are paid)
Kristen is hired by ABC Company to work a total of five days December 26 through December 30. On
December 30, Kristen turns in her time card and ABC Company gives her a check on the next scheduled
payday, January 15th. (matching principle) - Answer: the paycheck was issued in January, the matching
principle requires the expense to be reported in December when the work was completed
what is a salary? - Answer: a regular but fixed amount paid to an employee for working (before taxes
and deductions / gross amount)
how often are salaries paid? - Answer: usually semi-monthly (on the 15th and last days of the month) or
bi-weekly (every other Friday)
what is a salary typically referred to as? - Answer: a yearly sum (ex: $35,000 per year)
, describe salaried employees - Answer: they earn a specific annual amount, so the gross pay per pay
period is typically the same recurring amount
Brenda makes $72,000 per year and her salary is paid semi-monthly. What is her gross pay for each of
the 24 pay periods? - Answer: $3,000
who typically uses time cards? why? - Answer: wage earning employees to record their hours worked
what is a time card? - Answer: a document that records the amount of hours worked in a specific time
period
what does a time card include? - Answer: a starting time/date and ending time/date
what are wages? - Answer: regular payments to an employee made by an employer
do wages fluctuate? - Answer: they can fluctuate based on the number of hours or days an employee
works
how often are wages typically paid? - Answer: on an hourly or daily basis such as $15 per hour or $200
per day
how are wages determined? - Answer: by multiplying the employee's hourly or daily rate by the number
of hours or days worked (this figures the gross wage - wage prior to any deductions)
Kristen's pay rate for the five days she worked for ABC Company is $25.50 per hour. She worked seven
hours on each day. What is her gross wage? - Answer: $892.50 (25.5*35)
Adam's pay rate is $250 per day of work at ABC Company. He worked four days in March and 7 days in
April. What is the gross wage for March and April? - Answer: March: $1,000 (250*4), April: $1,750
(250*7)
