AIPB Mastering Payroll (National) Practice Exam

The correct recording of the employer's FICA tax expense is reflected in the choice that includes "Payroll tax expense" and "FICA Employer Payable." This is because FICA (Federal Insurance Contributions Act) taxes consist of Social Security and Medicare taxes that both the employee and employer are responsible for.

When the employer incurs FICA tax expenses, it is recorded as a "Payroll tax expense" since this expense is a cost associated with employing staff. It's not recorded under "Salary expense" because salary expense pertains specifically to wages paid to employees, whereas FICA tax represents a separate obligation of the employer.

The offsetting entry involves increasing the "FICA Employer Payable" account. This liability account indicates the amount the employer owes to the government for their portion of FICA taxes, which will ultimately need to be remitted during the payroll tax deposit. Thus, the recognition of these accounts accurately reflects the employer's obligation to pay not only the wages but also the relevant payroll taxes associated with those wages.