The journal entry to record employer payroll taxes affects:<\/p>\n\n\n\n
assets only.
liabilities only.
liabilities and stockholders’ equity.
assets and liabilities.<\/p>\n\n\n\n
The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n Correct Answer:<\/strong> When an employer records payroll taxes, it impacts both liabilities and stockholders’ equity. Employer payroll taxes include Social Security taxes (FICA), Medicare taxes, federal and state unemployment taxes (FUTA and SUTA), and other employer-paid contributions. These taxes represent additional expenses that the company incurs on behalf of its employees.<\/p>\n\n\n\n When the employer records payroll taxes, it recognizes an obligation to pay taxes to the government. This increases the company\u2019s liabilities. The key payroll tax liabilities include:<\/p>\n\n\n\n Employer payroll taxes are considered an expense, which reduces the company’s net income. Net income flows into retained earnings, which is a component of stockholders’ equity. When payroll tax expenses increase, net income decreases, thereby reducing stockholders\u2019 equity.<\/p>\n\n\n\n When recording payroll tax expenses, the entry typically looks like this: This entry records the additional costs incurred by the employer, increasing liabilities while reducing net income and stockholders’ equity. However, assets are not directly affected by this entry, as no immediate cash outflow occurs at the time of recording the liability.<\/p>\n","protected":false},"excerpt":{"rendered":" The journal entry to record employer payroll taxes affects: assets only.liabilities only.liabilities and stockholders’ equity.assets and liabilities. The correct answer and explanation is : Correct Answer:Liabilities and Stockholders’ Equity Explanation: When an employer records payroll taxes, it impacts both liabilities and stockholders’ equity. Employer payroll taxes include Social Security taxes (FICA), Medicare taxes, federal and […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-202722","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/202722","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=202722"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/202722\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=202722"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=202722"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=202722"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
Liabilities and Stockholders’ Equity<\/strong><\/p>\n\n\n\nExplanation:<\/h3>\n\n\n\n
How Liabilities Are Affected:<\/strong><\/h4>\n\n\n\n
\n
How Stockholders’ Equity Is Affected:<\/strong><\/h4>\n\n\n\n
Journal Entry for Employer Payroll Taxes:<\/strong><\/h3>\n\n\n\n
Debit:<\/strong> Payroll Tax Expense (Increases Expenses, which reduces Equity)
Credit:<\/strong> FICA Taxes Payable (Liability)
Credit:<\/strong> FUTA Taxes Payable (Liability)
Credit:<\/strong> SUTA Taxes Payable (Liability)<\/p>\n\n\n\n