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FPC 2021 Fall > Practice Test 1 > Flashcards

Practice Test 1 Flashcards

1
Q

When a payroll department does not respond promptly to a penalty
notice from a governmental agency against an employee, this is an
example of:
A. poor problem solving.
B. breach of confidentiality.
C. lack of compliance.
D. responding to higher priorities.

A

A

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2
Q

What is the formula for calculating an employee’s net pay?
A. Gross pay - Deductions for taxes + Other deductions
B. Other deductions + Gross pay - Deductions for taxes
C. Gross pay + Deductions for taxes + Other deductions
D. Gross pay - Deductions for taxes - Other deductions

A

D

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3
Q

Under the FLSA how old must a minor be to be employed?
A. 12
B. 13
C. 14
D. 16

A

C

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4
Q

What is the FUTA tax rate?
A. 0.6%
B. 1.45%
C. 5.4%
D. 6.0%

A

D

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5
Q

On Form 941, the employer reports:
A. unemployment wages.
B. disability deferred compensation excise tax.
C. social security wages.
D. unemployment taxes.

A

C

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6
Q

All of the following are payroll control procedures EXCEPT:
A. external audits.
B. edits.
C. system selection.
D. security.

A

C

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7
Q

If the human resources and payroll systems are not integrated,
what individual employee data should be retained in both systems?
A. Garnishment deductions
B. Taxable earnings
C. Gross earnings
D. Pay rate

A

D

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8
Q

An employee’s monthly income is insufficient to pay for all his
deductions. The deductions were issued and received by the employer
in the following order:
• $60.00 in creditor garnishments
• $125.00 direct payment for his mortgage
• $300.00 for child support
• $105.00 federal tax levy

Generally, which deduction has SECOND priority?
A. Direct mortgage payment
B. Child support
C. Federal tax levy
D. Creditor garnishment

A

C

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9
Q

Which of the following plans can discriminate in favor of highly
compensated employees?
A. 403(b) plans
B. Section 125 benefit plans
C. Defined contribution plans
D. Nonqualified deferred compensation plans

A

D

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10
Q

What is the federal minimum wage per hour on January 1, 2021?
A. $5.15
B. $5.85
C. $6.55
D. $7.25

A

D

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11
Q

A company is located in a state with no state or local income taxes.
When grossing up holiday bonuses for employees who have already
earned more than $142,800.00 but less than $175,000.00, the
payroll department should divide the amount of the bonus by what
percentage?
A. 75.00%
B. 76.55%
C. 71.55%
D. 67.35%

A

B

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12
Q

An employee died on Saturday. His payday was the previous
Friday, and he had not yet cashed his check. What, if anything,
should the payroll department do?
A. Reissue the check to the employee’s estate/beneficiary
B. Reissue the check without the federal income tax
withholding
C. Reissue the check with no tax withholding
D. Nothing

A

A

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13
Q

What law determines the time limits with which employees must
be paid after wages are earned?
A. Fair Labor Standards Act
B. Internal Revenue Code
C. Social Security Act
D. State laws

A

D

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14
Q

To convey assurance to a customer, a payroll practitioner should:
A. display confidence and competence.
B. have organizational skills.
C. provide a benefit employees can purchase with after-tax
dollars.
D. get things done promptly.

A

A

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15
Q

Cafeteria plans are authorized by what Internal Revenue Code
Section?
A. 125
B. 401(k)
C. 403(b)
D. 457(b)

A

A

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16
Q

The direct deposit data sent to the bank after payroll processing is
an example of a(n):
A. reasonability test.
B. hash total.
C. interface.
D. validity edit.

A

C

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17
Q

What taxes, if any, must be withheld from payments to an independent
contractor who provided a TIN?
A. Federal income tax only
B. Social security and Medicare taxes only
C. Federal income, social security, and Medicare taxes
D. No taxes are withheld

A

D

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18
Q

Which of the following employees is an exempt employee?
A. A production supervisor paid a weekly salary of $1,000.00
who is responsible for hiring, reviewing, and scheduling
employees and handling employee complaints
B. A laboratory assistant paid a weekly salary of $600.00 who
is responsible for cleaning and maintaining the facilities
and performing some quality control testing, which is reviewed
by her supervisor
C. An assistant office manager earning over $684.00 per week
but not managing the department or supervising other employees
on a regular basis
D. A purchasing agent paid a weekly salary of $400.00 a week

A

A

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19
Q

An external audit:
A. provides assurance that fraud has not occurred.
B. allows investment in the company.
C. provides assurance that the finances have been handled correctly.
D. allows an objective assessment of the financial statements.

A

D

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20
Q

If a payroll practitioner is empathetic, she should:
A. arrive at work on time.
B. have good time management skills.
C. show sensitivity and treat all employees as individuals.
D. share confidential information with the employees when
they request it.

A

C

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21
Q

Which of the following statements is true regarding payroll tax
deposits?
A. Employers are penalized for failing to deposit 100% of their
tax liability by the due date.
B. Employers with accumulated payroll taxes under $2,500 for
a month can deposit the amount due with their quarterly tax
return.
C. Employers accumulating a tax liability of more than $50,000
in the lookback period file Schedule B with Form 941.
D. Employers must withhold taxes on noncash fringe benefits
at least quarterly.

A

C

22
Q

Employees’ privacy rights are governed by all the following
EXCEPT:
A. federal regulation.
B. state regulation.
C. company policy.
D. local legislation.

A

D

23
Q

Under the FLSA, what basis is used to determine whether a
nonexempt employee is to be paid overtime?
A. Hours worked in a day
B. Hours worked in a workweek
C. Hours worked in a pay period
D. Hours worked in a month

A

B

24
Q

Overtime payments are included in the calculation of what tax,
if any?
A. Federal income tax
B. Social security tax
C. Medicare tax
D. They are included in all tax calculations

A

D

25
Q

What is the 2021 wage base for social security tax?
A. $132,900.00
B. $137,700.00
C. $142,780.00
D. $200,000.00

A

C

26
Q

Which of the following types of compensation is taxable?
A. Bonuses
B. Workers’ Compensation benefits
C. De minimis fringe benefits
D. Job-related educational assistance

A

A

27
Q

If an employee does not have federal income tax withheld and has
not claimed exempt, what must the employer do?
A. Provide the employee with the EITC notice
B. Withhold federal income tax in the subsequent year
C. Request that the employee submit a new Form W-4.
D. Not report the amount of the payments in Box 1 of Form W-2

A

A

28
Q

What advantages does a payroll checking account provide?
A. Prevents fraud
B. Facilitates reconciliations
C. Ensures that reconciliations are completed in a timely manner
D. Ensures that checks are issued correctly

A

B

29
Q

A computerized payroll system can help a payroll department accomplish
all of the following tasks EXCEPT:
A. recognize changes in laws and regulations.
B. maintain compliance with laws and regulations.
C. produce timely, accurate paychecks.
D. retain records.

A

A

30
Q

An employee’s profit sharing bonus is payable in the year following
his death. How should the bonus be taxed and reported?
A. Withhold no taxes and report the bonus on Form 1099-MISC
B. Withhold social security and Medicare taxes only and report
on both Form W-2 and 1099-MISC
C. Withhold social security and Medicare taxes only and report
the bonus on Form W-2
D. Withhold FIT at the optional flat rate and social
security and Medicare taxes; report the bonus on Form W-2
Printed for:

A

A

31
Q

In what ways can a computerized payroll system increase the
accuracy
of employee paychecks?
A. By reducing human error
B. By providing reports detailing the calculations
C. By making multiple calculations very quickly
D. By making multiple calculations in the same way

A

A

32
Q

What federal taxes must an employer withhold from an employee’s
reported tips?
A. Federal income tax only
B. Social security tax only
C. Medicare tax only
D. Federal income, social security and Medicare tax

A

D

33
Q

All of the following are voluntary deductions EXCEPT:
A. credit union payments.
B. health insurance deduction.
C. creditor garnishment.
D. charitable contribution.

A

C

34
Q

The main purpose of batch controls is to:
A. facilitate tax reporting.
B. make filing easier.
C. validate data entry accuracy.
D. meet unemployment requirements.

A

C

35
Q

Which of the following types of compensation is taxable?
A. Backpay awards
B. Business use of a company vehicle
C. No-additional-cost fringe benefits
D. Qualified transportation fringe benefits

A

A

36
Q

Payroll faces challenges from all of the following items EXCEPT:
A. technology.
B. communication.
C. complexity.
D. tax rates.

A

D

37
Q

Which of the following amounts is used when calculating an
employee’s
gross-up?
A. Disposable income
B. Take-Home pay
C. Gross income
D. Net pay

A

D

38
Q

An employee is receiving a $500.00 net bonus. The employee
claims married filing jointly with nothing reported in steps 2, 3 or
4 of the current year’s Form W-4. The employee’s YTD gross pay is
$98,000.00 and the employee is paid biweekly. The employee lives
and works in a state where there is no income tax. Calculate the
gross amount of the bonus pay.
A. $500.00
B. $679.81
C. $710.73
D. $777.00

A

C

39
Q

Under the FLSA, when determining whether a nonexempt employee
is to be paid overtime, the employer uses the hours worked in a:
A. day.
B. workweek.
C. pay period.
D. month.

A

B

40
Q

Employees can provide their employer with their filing status, dependents,
and other adjustments for income tax withholding purposes
by:
A. telling their supervisor.
B. completing Form W-4.
C. completing their employment application.
D. a telephone call.

A

B

41
Q

Generally, what is the largest expense for most companies?
A. Salaries and benefits
B. Cost of goods
C. Depreciation
D. Nonoperating expenses

A

A

42
Q

What is a major payroll task that requires processing?
A. Completing forms for employees
B. Retaining records
C. Calculating taxes
D. Filing tax forms

A

C

43
Q

Which of the following statements is correct regarding Section
125 plans?
A. Employees working 10 hours a week or more must be
included
in the company’s Section 125 plan.
B. Any benefits received in cash are not taxed.
C. At the end of the plan year, employees receive cash payments
for amounts remaining.
D. Benefits can be changed during the plan year if there is a
qualified change in status.

A

D

44
Q

The amount of federal income tax that is withheld from an
employee’s
regular wages is determined by a formula that uses
all of the following information items EXCEPT:
A. pay period.
B. filing status.
C. a flat rate.
D. employee’s taxable wages.

A

C

45
Q

What authority controls the frequency with which employees
must be paid?
A. State laws
B. FLSA rules
C. Local laws
D. IRS rules

A

A

46
Q

All of the following statements about FLSA overtime regulations
are true EXCEPT:
A. a bonus paid under a union contract is included in the regular
rate of pay.
B. a holiday bonus, paid at the discretion of the employer, is
excluded from the regular rate of pay.
C. the week’s regular rate of pay must include shift premiums.
D. employers must pay overtime when employees work more
than eight hours in a workday.

A

D

47
Q

Payroll documentation accomplishes all of the following goals
EXCEPT:
A. ensuring uniformity.
B. providing a reference tool.
C. ensuring that procedures are followed.
D. simplifying training.

A

C

48
Q

All of the following statements are correct regarding online
processing EXCEPT:
A. the data is changed immediately.
B. the system is interactive.
C. the operator can communicate with the system as the data is
being processed.
D. the data to be processed may be batched.

A

C

49
Q

What is the general ledger?
A. A summary of transactions by date
B. The first place transactions are recorded
C. A chronological record of daily transactions
D. A record of transactions by account

A

D

50
Q

What, if any, is the 2021 wage base for Medicare tax?
A. $137,700.00
B. $142,800.00
C. $200,000.00
D. There is no limit

A

D

FPC 2021 Fall (7 decks)

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