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 best describes the difference between gross pay and net pay for an employee?

Gross pay is the total earnings before any deductions, while net pay is the amount the employee receives after all deductions.

Gross pay and net pay are the same and can be used interchangeably.

Gross pay includes only overtime earnings, while net pay includes only regular earnings.

Gross pay is the amount after taxes are deducted, while net pay is before any deductions.

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Verified step by step guidance

Understand the concept of gross pay: Gross pay refers to the total earnings an employee earns before any deductions are made. This includes regular wages, overtime pay, bonuses, and other earnings.

Understand the concept of net pay: Net pay is the amount the employee actually receives after all deductions are subtracted from the gross pay. Deductions can include taxes, retirement contributions, health insurance premiums, and other withholdings.

Compare gross pay and net pay: Gross pay is the starting point, representing the total earnings, while net pay is the final amount after deductions. They are not interchangeable as they represent different stages in the payroll process.

Eliminate incorrect options: Review the provided choices and identify inaccuracies, such as gross pay being described as including only overtime earnings or net pay being described as before deductions.

Select the correct answer: Based on the definitions and comparison, the correct answer is that gross pay is the total earnings before deductions, while net pay is the amount received after deductions.