TRUE/FALSE Instructions: Indicate whether each of the following statements is true or false by placing a check mark in the appropriate column. True False 1. The total earnings of an employee for a payroll period are 2. Only employers are required to contribute to the Federal 3. All states require that unemployment compensation taxes 4. Most employers are also subject to federal and state pay- called gross pay.. Insurance Contributions Act program. be withheld from employees' pay. roll taxes based on the amount earned by their employees, All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part True False 174 Chapter 11 effect on the firm's debits to the salary or wage expense 6. All payroll taxes levied against employers become liabili- 7. Depending on when it is to be paid, vacation liability may 5. . The amounts withheld from employees earnings have an accounts ties at the time the related remuneration is paid to employ- be classified in the balance sheet as either a current liabil- 8. To properly match revenues and expense, employees' va- cation pay should be accrued as a liability as the vacation rights are earned.. 9. Current installments on debt should not be disclosed as a current liability in order to match the disclosure method for 10. In order for revenues and expenses to be matched prop- erly, a liability to cover the cost of a product warranty must be recorded in the period when the product is repaired. 11. Potential liabilities that may arise in the future because of past transactions are called contingent liabilities..... 12. All changes in the constants of the payroll system, such as changes in pay rates, should be properly authorized in writing 13. The net periodic penision cost of a defined benefit plan is debited to Pension Expense, the amount funded is cred- ited t o Cash, and any unfunded amount is credited to Un- 14. Examples of postretirement benefits from an employer may include dental care, eye care, medical care ance, tuition assistance, or tax services. , life insur- 15. The rate used by a bank in discounting a note is ca prime rate