Chapter 12 Student: ___________________________________________________________________________ 1.Current compensation is usually comprised of salary, wages, and bonuses. True False
2. Employees complete a Form W-2 to specify their income tax withholding.
3. Employers computing taxable income receive a deduction for salary and wages paid to employees.
4. Employers computing taxable income under the accrual method may deduct wages accrued as compensation expense in one year and paid in the subsequent year, as long as the company makes the payment within 2½ months after the employer's year-end.
5. One purpose of Form W-4 is to determine an employee's withholding. True False
6. On Form W-4, an employee can only claim one allowance for each personal or dependency exemption that will be claimed on the employee's income tax return.
7. When an employee has more than one employer during the year and the combined compensation exceeds the Social Security wage base, the excess Social Security is treated as an additional income tax payment.
8. Employer's receive a deduction for compensation paid to and employment taxes paid on behalf of employees.
9. An employer always receives a deduction for total compensation paid to a CEO. True False
10. One primary purpose of equity compensation is to motivate employees.
11. The date on which stock options are given to the employee is called the exercise date.
12. Stock options will always provide employees with future compensation.
13.The date on which stock options are no longer subject to forfeiture is called the vesting date. True False
14. When stock options are exercised they are converted into actual employer stock.
15. Employees will always prefer to receive incentive stock options over nonqualified stock options.
16.Employers always prefer to award incentive stock options rather than nonqualified stock options.
