CPM Payroll Accounting and Reporting 3

Question 1

Which financial statement line item is most directly affected when payroll liabilities remain unpaid at period-end?

Accepted Answer

Accrued liabilities on the balance sheet

Answer

Unpaid payroll obligations are recorded as accrued liabilities (a current liability) on the balance sheet until disbursed.

Question 2

Which of the following is an example of a voluntary payroll deduction?

Accepted Answer

Employee contribution to a health insurance premium

Answer

Health insurance premium contributions are voluntary deductions elected by employees, unlike mandatory tax withholdings required by law.

Question 3

What is the effect on the general ledger when an employer remits withheld federal income taxes and FICA taxes to the IRS?

Accepted Answer

Debit FICA Taxes Payable and Federal Income Tax Payable; Credit Cash

Answer

Remitting tax deposits eliminates the liability accounts (debit) and reduces cash (credit), reflecting the payment of previously accrued obligations.

Question 4

Under the deposit rules for Form 941, a monthly depositor must remit taxes by which deadline?

Accepted Answer

The 15th of the following month

Answer

Monthly depositors must deposit employment taxes accumulated in a calendar month by the 15th day of the following month.

Question 5

A company incorrectly classifies a worker as an independent contractor. What is the primary accounting consequence when the error is discovered?

Accepted Answer

The company must record back payroll taxes, penalties, and interest as a liability

Answer

Misclassification requires the employer to accrue unpaid payroll taxes, employer FICA, FUTA, and potential IRS penalties and interest as liabilities.

(CPM) Certified Payroll Manager Practice Test