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Chapter 11 Characteristics of Liabilities Defining Liabilities -A probably future payment of 2 Note Given to Borrow from Bank Payroll Liabilities -the total compensation an employee earns including wages, salaries, commissions, bonuses, and any compensation earned before deductions such as taxes Examples of voluntary deductions: Employee FICA Taxes Employers usually separate FICA taxes into two Employee Income Tax The amount withheld depends on the employee’s annual earnings rate and the number of the employee claims. Employee Voluntary Deductions These withholdings arise from employee requests, contracts, unions or other agreements. Recording Employee Payroll Deductions Employer FICA Tax Employers must pay FICA taxes equal in amount to the FICA taxes withheld from their employees Federal and State Unemployment Taxes Federal Unemployment Taxes (FUTA) Employers are subject to a federal unemployment tax on wages and salaries paid to their employees State Unemployment Tax (SUTA) All states support their unemployment insurance programs by placing a payroll tax on employers This base rate is adjusted according to an employer’s __________ rating. Recording Employer Payroll Taxes Multi-Period Known Liabilities Many known liabilities exte nd over multiple periods. These often include Amounts in this account are liabilities, but are they current or long term? BOTH. Estimated Liabilities Estimated Liabilities- Many companies provide Many employers also contribute to , which are agreements by employers to provide benefits (payments) to employees after Reasonably Possible Contingent Liabilities Potential Legal claims Uncertainties