Author Question: Explain how payroll affects the liabilities of a firm. What will be an ideal ... (Read 27 times)

littleanan · **on:** Jul 5, 2018

Explain how payroll affects the liabilities of a firm.

What will be an ideal response?

Question 2

The employer usually pays the entire cost of
a. FICA.
b. Workers' Compensation Insurance.
c. Medical Insurance.
d. Disability Insurance.

alvinum · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

Employers must, by law, withhold federal income tax, FICA, and Medicare taxes from employees and pay those amounts to the federal government periodically. Amounts withheld from employees become liabilities for the employer. The employer must also match the FICA and Medicare withheld from employees, which increases the employer's liabilities. In addition, the employer must pay the employee the net amount of what has been earned. A current liability called salaries payable or wages payable increases when salaries and wages are earned and decreases when employees are paid.

Answer to Question 2

b