Betty's practice exam questions Flashcards
Company deadlines for payroll data input documents are essential for which:
timely processing of the payroll
accurate entry of data
guaranteeing that all information is processed
adequate auditing purposes
timely processing of the payroll
All of the following data elements are required to be maintained in the employee masterfile EXCEPT:
social security number
birth date
marital status
hourly rate of pay
marital status
he fact that transactions affect two separate accounts of a business is called:
compound- entry accounting
double- entry accounting
accrual accounting
T- accounting
double- entry accounting
Upward communication involves:
dissemination of management decisions to the staff
interactions between you and your manager
passing information to management
conducting quality circle meetings
passing information to management
Which of the following answers BEST defines the term nonexempt under the FLSA?
a lower- paid class of employees
hourly- paid workers only
employees who must be paid overtime
a special class of employees as determined by the employer
employees who must be paid overtime
For how many years must the employer’s copy of Form 940 be retained?
2
3
4
5
4
Employees who are not eligible for direct deposit and receive paychecks sent through the mail are constructively paid:
on the check date
when the checks were postmarked
when the checks were delivered
when the checks were cashed
when the checks were delivered
Copies of the production files and most recent payroll transactions are sent nightly to the parent company in a remote location. This practice is part of what type of plan?
security
control
disaster recovery
maintenance
disaster recovery
Which of the following factors provides system security?
access level authorizations
shared passwords
conducting “physical payouts”
segregation of duties
access level authorizations
Under the FLSA, how long are employers required to keep records relating to wages, hours, and conditions of employment?
3 years
4 years or until the file is no longer active
7 years
permanently
3 years
What is the payroll department manager responsible for in a company with strong internal controls?
assuring segregation of duties in the department
developing company policy
initiating payroll transactions
writing the internal audit transaction test plan
assuring segregation of duties in the department
The process of balancing multiple time sheets within a specified pay period utilizes a procedure know as:
batch totaling
exception reporting
system documentation
reconciliation
batch totaling
On what form must mistakenly paid wages, for which no repayment is made, be reported?
W- 2
W- 4
1099- R
1099- MISC
W- 2
A report has been requested that is NOT a standard report from the system. This type of report is called a(n):
ad- hoc report
integrated report
batch system report
edit report
ad- hoc report
Which of the following statements is CORRECT regarding a federal tax levy?
It does not have to be honored if any other garnishments have been served.
It requires a new order for each pay period.
It is limited only by the amount of the employee’s net pay.
It is continued each pay period until a release of levy is received.
It is continued each pay period until a release of levy is received.
Penalties for failure to make timely deposits are determined by:
a flat rate of 10% for late deposits
5% of the undeposited amount with a maximum of $100,000
15% of the undeposited amount with a maximum of $100,000
a four- tiered penalty structure based on the number of days the deposit is late
a four- tiered penalty structure based on the number of days the deposit is late
Under the FLSA, a workweek is defined as:
any 7 consecutive 24- hour periods
Sunday through Saturday
a minimum of a 40- hour/5- day time frame
stated in a collective bargaining agreement
any 7 consecutive 24- hour periods
At least how often must employers report noncash fringe benefits as income for federal tax withholding purposes?
each pay period
monthly
quarterly
annually
annually
Certain company records must be retained for four years to comply with regulations of which of the following agencies?
U.S. Citizenship and Immigration Services
Internal Revenue Service
Social Security Administration
Wage and Hour Division, Department of Labor
Internal Revenue Service
To build morale and motivate staff, a manager must:
give good reviews and raises
reward “stars” and promote competition within each team
delegate accountability to staff members
be sincere and specific with praise
be sincere and specific with praise
From which of the following taxes are statutory workers’ compensation payments exempt?
federal income tax only
social security and Medicare taxes only
federal unemployment tax only
federal income, social security, Medicare, and federal unemployment taxes
federal income, social security, Medicare, and federal unemployment taxes
Which of the following items represents an input interface to the payroll system?
general ledger
time and attendance
benefit payments
material usage records
time and attendance
One reason many companies use a Zero Balance Checking Account is that:
cash is available for investment until items are presented for payment at the company’s bank
funds do not have to be deposited until the employee cashes the check
the company receives interest on the account
bank reconciliations are not required
cash is available for investment until items are presented for payment at the company’s bank
In a customer service situation, Payroll should:
assure the caller everything is okay, even when it is not
get in the last word
avoid addressing stressful issues
remain assertive and stay focused
remain assertive and stay focused
Each of the following items qualifies as a de minimis fringe benefit EXCEPT:
occasional parties and picnics for employees
occasional supper money for working overtime
traditional holiday gifts, such as food items
group legal services worth less than $100 annually
group legal services worth less than $100 annually
All of the following steps are required when initiating direct deposit for an employee EXCEPT:
prenotification
receiving financial institution routing number
getting authorization from the employee
receiving employee’s bank account number
prenotification
When paying supplemental wages along with regular wages WITHOUT specifying the amount of each, how would a company determine the amount of income tax to withhold from the supplemental wages if the employee has been paid no supplemental wages so far during the year and the supplemental wage payment is no more than $1,000,000?
Withhold a flat 22% from the supplemental wages and withhold from regular wages using the appropriate table.
Withhold a flat 22% from the supplemental wages.
Withhold income tax as if the total were a single wage payment for a regular payroll period.
Compute income tax withholding on the regular wages separate from the supplemental wages.
Withhold income tax as if the total were a single wage payment for a regular payroll period.
An employer that deposits payroll taxes semiweekly incurs a tax liability of $55,000 on Tuesday and a tax liability of $110,000 on Wednesday. When must the taxes be deposited?
$55,000 on Thursday and $110,000 on Friday
$55,000 on Friday and $110,000 on the next Wednesday
$110,000 on Thursday and $55,000 on Friday
$165,000 on Thursday
$110,000 on Thursday and $55,000 on Friday
Documenting payroll policies and procedures will provide all of the following results EXCEPT:
a vehicle for improving processes
a tool for assessing internal business controls
a mechanism for educating payroll partners, suppliers, and customers
assurances of payroll personnel competency and performance
assurances of payroll personnel competency and performance
Which of the following records MUST be kept for four years?
hours worked
time cards
OSHA records
voided payroll checks
voided payroll checks
Techniques for conducting periodic physical payouts:
are the same for all employees
vary by whether the employee is paid by check or direct deposit
vary for some employees such as telecommuters
vary by wage class and compensation level
are the same for all employees
Which of the following plans describes a cafeteria plan under section 125 of the Internal Revenue code?
a quantified and accountable expense reimbursement plan
a tax- qualified retirement plan for public educational institutions
a plan which permits employees to select from two or more qualified taxable and nontaxable benefits
a plan whereby state government employees may request that pretax dollars be set aside in a retirement account until age 59
a plan which permits employees to select from two or more qualified taxable and nontaxable benefits
Employers in non- credit reduction states that pay their state unemployment taxes on time can deduct up to what percentage from the full FUTA tax rate in calculating their FUTA tax payments?
0.6%
4.5%
5.4%
6.0%
5.4%
Which of the following items determines the disposition of unclaimed wages?
state law only
federal law only
federal and state law
not recognized procedures exist
state law only
Employee deferrals under section 401(k) are subject to which taxes?
federal income, social security, and Medicare taxes
social security and Medicare taxes only
social security, Medicare, and FUTA taxes
federal income, social security, Medicare, and FUTA taxes
social security, Medicare, and FUTA taxes
What does it mean if, at the end of an accounting period, a company has a debit balance in a liability account?
The company has under deposited taxes withheld from employee wages.
The company has not yet paid the third party.
The company has withheld too much from the employee.
The company has paid to a third party more than was withheld from the employee.
The company has paid to a third party more than was withheld from the employee.
All of the following factors are advantages of having an in- house developed payroll/HR system EXCEPT:
scheduling flexibility
user groups
security
control of the system
user groups
A payroll department manager should assure:
independent mission statement
appropriate training and equipment resources for staff members
immediate enactment of employee suggestions
top payment of staff
appropriate training and equipment resources for staff members
Which of the following statements describes a self- insured workers’ compensation plan?
The state pays the workers’ compensation payments.
The employer funds the workers’ compensation payments.
The wages will continue as if the employee is still working.
The individual employee is responsible for his own insurance.
The employer funds the workers’ compensation payments.
The proper handling of a stop payment includes all of the following steps EXCEPT:
reversing the direct deposit
canceling the payment in the payroll system
notifying the bank account reconciliation employees
documenting the reason for the transaction
reversing the direct deposit
A request for proposal (RFP) can be used to:
provide vendors with technical and functional system requirements
request funds during a budget process
analyze needs for the system
assign programming resources to enhance functionality
provide vendors with technical and functional system requirements
The Family and Medical Leave Act requires employers to maintain records for at least:
12 weeks
1 year
2 years
3 years
3 years
How may federal income tax be withheld from separation pay and accrued vacation wages totaling $20,000 that are paid at the time of termination and identified separately on the employee’s paystub, if the employee has been paid $25,000 so far this year and had income tax withheld from her most recent wage payment?
using the aggregate method only
using the prior 12 months’ tax rate
at the optional flat rate for all payouts at termination only
at the optional flat rate or using the aggregate method
at the optional flat rate or using the aggregate method
A payroll register for the pay period shows gross earnings of $300,000 and deductions of $120,000. The entry to the payroll expense account would be:
$120,000
$180,000
$300,000
$420,000
$300,000
Payroll system user documentation should include:
a copy of the RFP
copies of project development documents
details of disaster recovery procedures
the history of the payroll system conversion
details of disaster recovery procedures
When checking for phantom employees, which of the following actions should be taken?
Notify the employees of an impending physical payout.
Have the managers hand checks out to their employees.
Have employees pick up checks and direct deposit/paycard advices and show identification.
Mail checks directly to employees’ homes.
Have employees pick up checks and direct deposit/paycard advices and show identification.
Which form is used to request an employer identification number?
I- 9
SS- 4
SS- 5
SS- 8
SS- 4
One element of a payroll calendar is:
pay frequency
hire dates
total remuneration
social security numbers
pay frequency
With online input, what is the BEST way to control miscellaneous payments?
verification of a sample of entered data
a visual audit of the online activity report
an auditor’s comparison of each input source document to the data base record
a comparison of the online report totals to predetermined totals taken from the source documents
a comparison of the online report totals to predetermined totals taken from the source documents
Employer- sponsored athletic facilities may be nontaxable fringe benefits if the:
employer requires substantiation of the amount, time, and business purpose of the facilities’ use
employer incurs no substantial additional cost, except labor, to provide the facilities
facilities are on the employer’s premises
facilities qualify as a de minimis fringe
facilities are on the employer’s premises
All of the following actions demonstrate a strong customer service orientation EXCEPT:
exhibiting a customer friendly attitude
viewing customers as the most important part of the job
using voice mail to answer phone calls from customers
establishing relationships with people
sing voice mail to answer phone calls from customers
When an employer is advised by the IRS that an employee’s Form W- 4 is invalid, what action must the employer take?
All future Forms W- 4 must be sent to the IRS as long as the employee is being paid.
Employers have no obligation to change exemptions unless notified by the employee through a new Form W- 4.
Withhold on the basis of information provided by the IRS.
The employer should send a notice at the end of the quarter, requesting that the employee contact the IRS to clear up the problem.
Withhold on the basis of information provided by the IRS.
An employee who works for more than one employer and has exceeded the social security wage base may:
take a credit against federal income tax on Form 1040
demand that the employer refund the overage
apply the social security tax to next year’s withholdings
apply the overage to benefits paid at age 65
take a credit against federal income tax on Form 1040
When determining the value of employer- provided parking, which of the following valuation methods is allowed?
employer’s cost
employee’s cost
lower of employee’s cost or fair market value
fair market value
fair market value
What is the purpose of the payroll accrual entry?
to recognize expenses in the period in which they were incurred
to reverse an entry made in error
to recognize expenses in the period in which they were paid
to reverse an entry from a previous period
to recognize expenses in the period in which they were incurred
Which of the following steps is LEAST important during the parallel testing phase of a new payroll system?
the testing of employee earnings and deductions accuracy
the verification of employees transferred to the new system from the old system
the verification of tax withholding calculations for employees
testing the functionality of a wage attachment process
testing the functionality of a wage attachment process
All of the following types of compensation are subject to social security tax EXCEPT:
tips under $100
deferred bonus
third- party sick pay up to $3,000
workers’ compensation benefits
workers’ compensation benefits
Which of the following outcomes is the PRIMARY advantage of developing an in- house system?
Outsiders are not involved in a firm’s daily operations.
Costs are reduced and can be distributed on an equitable basis.
The employer controls the entire computer system.
Time is saved by not having to explain business policies and practices.
The employer controls the entire computer system.
An employee covered by group health insurance at the time his employment terminates to return to school is entitled to COBRA continuation rights for:
12 months
18 months
24 months
30 months
18 months
How often are Form 940 taxable wages reported?
annually
semi- annually
quarterly
monthly
annually
On a company’s financial statements, payroll tax expense appears in the:
balance sheet
accrued payroll
salaries expense
income statement
income statement
What is the chief advantage of a vendor payroll package?
reduced processing time
inexpensiveness and ease of installation
no required major in- house system development
lower cost than a service provider contract
no required major in- house system development
Which of the following elements is essential to a disaster recovery plan?
an excess supply of checks and direct deposit stubs
a compatible off- site remote location to produce payrolls
detailed documentation of current company policies
a procedure for limiting security system access
a compatible off- site remote location to produce payrolls
Which of the following practices is a strong internal control procedure?
Have the payroll bank account reconciled in the payroll department.
Have the payroll manager distribute paychecks.
Place payroll checks under the personal control of the payroll manager.
Have a person other than the person who requested and authorized the payments prepare the payroll checks.
Have a person other than the person who requested and authorized the payments prepare the payroll checks.
During 2024, an employee worked for company A and quit after earning $150,000. Later in the same year the employee was hired by company B. With respect to social security, Medicare and FUTA, how should company B treat the employee’s earnings as of the first wage payment?
Start accumulating social security, Medicare, and FUTA wages, and withhold both social security and Medicare taxes.
Start accumulating Medicare wages only, and withhold only Medicare tax.
Start accumulating social security, Medicare, and FUTA wages, but withhold Medicare tax only.
Start accumulating Medicare wages only, but withhold both social security and Medicare taxes.
Start accumulating social security, Medicare, and FUTA wages, and withhold both social security and Medicare taxes.
Which of the following documents proves an employee’s identity and authorization to work?
social security card
unexpired U.S. passport
birth certificate
Form I- 9
unexpired U.S. passport
How are salaries reflected on the income statement?
income
assets
accruals
expenses
expenses
All of the following techniques would enhance the level of customer service EXCEPT:
adding more customer service personnel
publishing payroll customer service procedures, calendars, and directories
utilizing automated call processing tools to take and process caller inquiries
training company management on pay calculation and tax withholding rules
training company management on pay calculation and tax withholding rules
The KEY difference between user guides and payroll policies and procedures is:
User guides focus on tasks associated with automated tools.
Payroll policies and procedures set company policies and standards.
User guides help payroll personnel interpret company policy.
Payroll policies and procedures permit human resources to design new compensation and benefits programs.
User guides focus on tasks associated with automated tools.
A local national is defined as an employee:
from another country working in the U.S.
from the U.S. working in a foreign country
from a foreign company working in the U.S.
from a foreign country working in his or her home country location
from a foreign country working in his or her home country location
One employment data element in the masterfile is:
hourly rate of pay
marital status
birthdate
occupation
hourly rate of pay
Which of the following authorities dictates the information provided on a payroll check stub?
individual states
Federal Unemployment Tax Act
Federal Wage and Hour Division
Social Security Administration
individual states
Which of the following forms may be submitted to the IRS in order to receive a written determination of a worker’s status as an employee or independent contractor?
Form W- 5
Form SS- 5
Form SS- 8
Form W- 9
Form SS- 8
A company pays all executives semimonthly. The FLSA requires all other employees to be paid on:
a weekly cycle
a biweekly cycle
a semimonthly cycle
any established cycle
any established cycle
To exhibit good customer service skills, payroll staff must understand and be able to explain:
payroll forms
benefits enrollment techniques
systems design decisions
strategic departmental direction
payroll forms
Transactions are recorded in chronological order into books of original entry called:
registers
vouchers
invoices
journals
journals
A team comprised of members of a department’s staff with the intention of improving their own process is a:
cross- functional team
conversion team
functional team
management team
functional team
All of the following practices are acceptable to an external auditor EXCEPT:
the accounting department reconciling the payroll checking account
the payroll supervisor verifying that deposits are made timely
storage of blank payroll checks in the payroll department
the treasury department being responsible for the signature of payroll checks
storage of blank payroll checks in the payroll department
Which of the following features is LEAST likely to be considered when looking at the security of a new payroll system?
regular data back-up and storage
limit system access
protection against computer viruses
system edits
system edits
As part of the implementation of a new payroll system, all transactions from the most recent actual payroll are processed in the new system prior to using the system to run payrolls. This is an example of what type of resting?
compliance
back- up
ongoing
parallel
parallel
The KEY advantage of using an automated time and attendance system is that it:
identifies phantom employees
reduces errors
interfaces with the payroll system
frees supervisors from having to review hours
reduces errors
With regard to employees’ reported tips, the employer must:
withhold and pay only the employees’ portion of social security and Medicare taxes on tips
report taxes on tips separately when making an employment tax deposit
report tips as wages on Form W- 2 and pay the employer portion of social security and Medicare taxes
report and pay the employer portion of social security and Medicare taxes on the portion of cash tips above the federal minimum wage
report tips as wages on Form W- 2 and pay the employer portion of social security and Medicare taxes
A procedure to have a time record signed by an employee indicates:
authorization for payment
confirmation of total hours
hours cannot be challenged
time spent at the establishment
confirmation of total hours
What is the effect of failing to record salaries that are earned but not paid at the end of an accounting period?
understatement of expenses for the period
overstatement of expenses for the period
understatement of assets for the period
overstatement of liabilities for the period
understatement of expenses for the period
All of the following data elements are required to be maintained in the employee masterfile EXCEPT:
social security number
birth date
marital status
hourly rate of pay
marital status
The BEST reason for tracking pay-related problem statistics is to enable Payroll to:
identify root causes and take actions to prevent similar recurrences
apologize to clients in a more professional manner
direct problems to those who cause the problem
justify more resources to handle more problems
identify root causes and take actions to prevent similar recurrences
