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

1. Introduction to Accounting

Useful Information

Financial Accounting

1. Introduction to Accounting

Useful Information

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Multiple Choice

Which of the following best describes pre-tax deductions and contributions in payroll accounting?

Mandatory taxes withheld from an employee's paycheck, such as federal income tax and Social Security tax.

Employer-paid benefits that do not affect the employee's taxable income.

Amounts added to an employee's net pay after taxes are withheld, such as bonuses and commissions.

Amounts subtracted from an employee's gross pay before taxes are calculated, such as retirement plan contributions and health insurance premiums.

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Verified step by step guidance

Step 1: Understand the concept of pre-tax deductions and contributions. These are amounts subtracted from an employee's gross pay before taxes are calculated. Examples include retirement plan contributions (e.g., 401(k)) and health insurance premiums.

Step 2: Differentiate pre-tax deductions from other payroll components. For instance, mandatory taxes like federal income tax and Social Security tax are withheld after pre-tax deductions are applied, not before.

Step 3: Recognize that employer-paid benefits, such as employer contributions to health insurance, do not directly affect the employee's taxable income and are not considered pre-tax deductions.

Step 4: Understand that amounts added to an employee's net pay, such as bonuses and commissions, are not pre-tax deductions. These are additional earnings subject to taxation.

Step 5: Conclude that pre-tax deductions reduce the employee's taxable income, which can lower the amount of taxes owed. This aligns with the correct answer: 'Amounts subtracted from an employee's gross pay before taxes are calculated, such as retirement plan contributions and health insurance premiums.'