Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

9. Current Liabilities

Payroll and Payroll Taxes

Financial Accounting

9. Current Liabilities

Payroll and Payroll Taxes

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Multiple Choice

Which of the following is included in the employer's payroll taxes?

Employer's portion of Social Security and Medicare taxes

Employee's portion of Social Security and Medicare taxes

Employee's contributions to a 401(k) plan

Employee's federal income tax withholding

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Verified step by step guidance

Understand the concept of payroll taxes: Payroll taxes are taxes imposed on employers and employees, typically calculated as a percentage of the wages paid to employees. Employers are responsible for certain taxes, while employees have their own tax obligations.

Identify the employer's payroll tax responsibilities: Employers are required to pay their portion of Social Security and Medicare taxes, which are collectively known as FICA (Federal Insurance Contributions Act) taxes. These taxes are separate from the amounts withheld from employees' paychecks.

Clarify the employee's payroll tax responsibilities: Employees are responsible for their portion of Social Security and Medicare taxes, federal income tax withholding, and contributions to retirement plans like a 401(k). These amounts are deducted from their gross pay.

Distinguish between employer and employee obligations: The employer's portion of Social Security and Medicare taxes is an additional expense for the employer and is not deducted from the employee's paycheck. The other items listed in the problem (employee's portion of Social Security and Medicare taxes, 401(k) contributions, and federal income tax withholding) are employee obligations.

Conclude that the employer's payroll taxes include only the employer's portion of Social Security and Medicare taxes, as these are the taxes directly paid by the employer and not deducted from the employee's wages.