Question

The computer file used for recording payroll transactions for each employee and maintaining total wages paid for the year to date is the:

1) payroll transaction file
2) payroll master file
3) payroll bank account reconciliation
4) payroll tax returns

Answer 1

The payroll master file is the record of payroll transactions and total wages paid for each employee. It assists in processing payroll taxes and fulfilling legal reporting requirements.

Step-by-step explanation:

The computer file used for recording payroll transactions for each employee and maintaining total wages paid for the year to date is the payroll master file. This file is essential for businesses as it includes detailed payroll information for each employee, such as their personal details, pay rates, hours worked, taxes withheld, and cumulative wages paid. It helps in ensuring accurate payroll processing, tax withholding, and compliances with reporting requirements to various taxing jurisdictions. Businesses must keep this file updated and accurate to aid in the preparation of payroll taxes filings, which include deductions from an employee's wages like income tax, social security contributions, and insurances, and taxes paid by the employer based on the employee's wages. These are critical for meeting the obligations set forth by federal, state, and local governments.