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 a key difference between payroll taxes and income taxes?

Payroll taxes are typically shared by both employers and employees, while income taxes are usually paid only by employees.

Payroll taxes are voluntary, while income taxes are mandatory.

Payroll taxes are only paid by employers, while income taxes are only paid by employees.

Payroll taxes are based on investment income, while income taxes are based on wages.

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Verified step by step guidance

Understand the definitions of payroll taxes and income taxes. Payroll taxes are taxes imposed on wages and salaries, typically shared by both employers and employees, and fund programs like Social Security and Medicare. Income taxes are taxes on an individual's or entity's earnings, usually paid by employees based on their taxable income.

Analyze the first option: 'Payroll taxes are typically shared by both employers and employees, while income taxes are usually paid only by employees.' This aligns with the definition of payroll taxes, as employers and employees both contribute, and income taxes are generally paid by employees.

Evaluate the second option: 'Payroll taxes are voluntary, while income taxes are mandatory.' This is incorrect because both payroll taxes and income taxes are mandatory under law.

Assess the third option: 'Payroll taxes are only paid by employers, while income taxes are only paid by employees.' This is incorrect because payroll taxes are shared by both employers and employees, not solely paid by employers.

Review the fourth option: 'Payroll taxes are based on investment income, while income taxes are based on wages.' This is incorrect because payroll taxes are based on wages and salaries, not investment income. Income taxes, however, can apply to both wages and investment income.