K1 Payroll

Written by Saad Rahman (ACCA)

ACCA · New at Knowledge level · 5 questions

Name: ____________________ Date: ____________

Gross pay is $400,000, employee social security $30,000 and employee income tax $50,000. What is the net pay?
- A $480,000
- B $320,000
- C $350,000
- D $400,000
Gross pay is $400,000 and the employer's social security contribution is $40,000. What is the staff cost in profit or loss?
- A $360,000
- B $400,000
- C $320,000
- D $440,000
Gross pay is $400,000, employee income tax $50,000, employee social security $30,000 and employer social security $40,000, how much is owed to the authorities?
- A $120,000
- B $40,000
- C $50,000
- D $80,000
In the payroll journal, which account is credited with the income tax deducted from employees?
- A Tax payable (liability)
- B Revenue
- C Payroll expense
- D Bank
Which payroll amount is an additional cost to the employer on top of gross pay?
- A The net pay
- B The employee's income tax
- C The employer's social security contribution
- D The employee's social security contribution

Answer key

1. B, 2. D, 3. A, 4. A, 5. C

Net pay = gross pay less the employee's deductions.
Staff cost is gross pay plus the employer's contribution. The employee's deductions are already inside gross pay.
The tax, the employee's contributions and the employer's contributions are all owed: 50,000 + 30,000 + 40,000.
The tax withheld is a liability to the tax authority until it is paid.
Only the employer's contribution adds to the cost of employing someone.