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

When Payroll Tax Expense is debited, which of the following accounts are typically credited?

FICA Taxes Payable

Cash

Federal Unemployment Taxes Payable (FUTA)

Salaries and Wages Expense

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Verified step by step guidance

Understand the concept of Payroll Tax Expense: Payroll Tax Expense represents the employer's obligation to pay taxes related to employee wages, including Social Security (FICA), Medicare, and unemployment taxes (FUTA). These expenses are recorded as liabilities until they are paid.

Identify the accounts typically credited when Payroll Tax Expense is debited: When Payroll Tax Expense is recorded, the corresponding liabilities are credited to reflect the employer's obligation to pay these taxes in the future.

Analyze the specific accounts involved: FICA Taxes Payable is credited to account for Social Security and Medicare taxes owed by the employer. Federal Unemployment Taxes Payable (FUTA) is credited to account for unemployment taxes owed by the employer.

Consider the role of Cash: If the employer pays the taxes immediately, the Cash account is credited to reflect the reduction in cash. However, if the taxes are not paid immediately, the liability accounts (e.g., FICA Taxes Payable, FUTA Payable) are credited instead.

Exclude unrelated accounts: Salaries and Wages Expense is not credited in this transaction because it represents the gross wages earned by employees, not the employer's tax obligations. Focus only on the liability accounts and Cash as appropriate.