The amount of federal income taxes withheld from an employee's gross pay is recorded as a (n)

a. payroll expense

b. asset

c. liability

d. contra account

The correct answer is letter "C": liability.

Explanation:

Current Liabilities are company debts due within one year or one operating cycle, whichever greater. An operating cycle is the time it takes a company to purchase inventory and convert it into cash from sales. Current liabilities include items such as accounts payable, short-term debt, and taxes payable.