Multiple Choice
What is the term for the total amount of money an employee earns in a pay period before any deductions are made?
28
views
9. Current Liabilities
Payroll and Payroll Taxes
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
9. What is typically included in the total amount deducted from an employee's pay for federal payroll taxes?
A
Only federal income tax
B
Social Security tax and Medicare tax
C
Only Social Security tax
D
State income tax and unemployment tax
Verified step by step guidance1
Understand the concept of federal payroll taxes: Federal payroll taxes are mandatory deductions from an employee's paycheck that fund government programs such as Social Security and Medicare.
Identify the components of federal payroll taxes: Federal payroll taxes typically include Social Security tax and Medicare tax, which are separate from federal income tax.
Clarify the distinction between federal and state taxes: State income tax and unemployment tax are not part of federal payroll taxes; they are state-level deductions.
Review the purpose of Social Security and Medicare taxes: Social Security tax funds retirement, disability, and survivor benefits, while Medicare tax funds healthcare for individuals aged 65 and older.
Ensure understanding of the correct answer: The total amount deducted for federal payroll taxes includes Social Security tax and Medicare tax, as these are federally mandated deductions.
Related Videos
Related Practice
Payroll and Payroll Taxes practice set
Problem sets built by lead tutorsExpert video explanations