The Following Totals for the Month of June Were Taken

question 66

Multiple Choice

The following totals for the month of June were taken from the payroll register of Young Company:?? $$\begin{array} { l r } \text { Salaries expense } & \$ 15,000 \\\text { Social security and Medicare taxes withheld } & 1,125 \\\text { Income taxes withheld } & 3,000 \\\text { Retirement savings } & 500 \\\text { Salaries subject to federal and state } & \\\quad \text { unemployment taxes of } 6.2 \% & 4,000\end{array}$$ The entry to record the accrual of the employer's payroll taxes would include a debit to

• A) Payroll Tax Expense for $2,498
• B) Social Security and Medicare Tax Payable for $2,250
• C) Payroll Tax Expense for $1,373
• D) Payroll Tax Expense for $3,000

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Definitions:

Cost of Capital

The average rate of return a company must pay to its security holders to fund its assets, integrating the cost of debt and equity.

Incremental Cash Flows

The additional cash flow from taking on a new project, considered essential for analysis in capital budgeting.

Sunk Costs

Costs that have already been incurred and cannot be recovered or altered, not affecting future business decisions.

Capital Budgeting

Capital budgeting is the process by which a business evaluates and selects long-term investments based on their potential to generate profitable returns over time.