Question 1

Title VII of the Civil Rights Act of 1964 forbids?

Accepted Answer

Discrimination in employment based on: Race Color Religion Religion- Limitation Sex National Origin Note Title VII does not protect: Elderly (but see ADEA) Disabled (but see ADA)

Question 2

Title VII of the Civil Rights Act of 1964 applies to? Who enforces Title VII?

Accepted Answer

1. Employers having 15 or more employees for at least 20 weeks, and 2. Whose business affects interstate commerce (virtually every business) Title VII is enforced by the Equal Employment Opportunity Commission (EEOC)

Question 3

Title VII Defenses for Employers

Accepted Answer

Bona Fide Occupational Qualification -- (BFOQ) i.If a requirement that has a discriminatory impact is a bona fide occupational qualification pertaining directly to the needs of the job, then it is not a Title VII violation. Bona Fide seniority or merit system -- i.No affirmative action plan can override such systems. Professional-developed ability test -- i.Purpose -- To prove that standards or requirements serve a legitimate business purpose.

Question 4

Age Discrimination in Employment Act (ADEA)

Accepted Answer

A. Purpose -- To supplement Title VII, which did not address age discrimination, by eliminating discrimination against older workers. B. Protects -- Individuals 40 years and older. 1.Main Effect: Prohibit mandatory retirement. a.Exemption for executives 65 or older; b.Former exemption: Tenured professors. 2.Also protects from discrimination in all other areas of employment practice. 3.There is no cause of action for "reverse age discrimination" against the young. C. Applies to: -- 1. Businesses employing at least 20 people; 2. State and Local Governments; 3. Unions (with at least 25 members); 4. Employment Agencies. D. Procedures, remedies, and defenses are generally same as under Title VII --

Question 5

Americans with Disabilities Act (ADA)

Accepted Answer

Similar qualifications for Title VII (15 employees or more, enforced by the EEOC, etc.) _Protected:_ Muscular dystrophy HIV infected Mental retardation Alcoholism Emotional illness _Not Protected:_ Homosexuality Bisexuality Transvestitism Transsexualism Pedophilia Exhibitionism Voyeurism Sexual behavior disorders Compulsive gambling Kleptomania Pyromania Psychiatric substance disorders resulting from current illegal use of drugs or abuse of alcohol

Question 6

Which of the following statements is correct under the Federal Fair Labor Standards Act? Some workers may be included within the minimum-wage provisions, but exempt from the overtime provisions. Some workers may be included within the overtime provisions, but exempt from the minimum-wage provisions. All workers are required to be included within both the minimum-wage provisions and the overtime provisions. Possible exemptions from the minimum-wage provisions and the overtime provisions must be determined by the union contract in effect at the time.

Accepted Answer

Some workers may be included within the minimum-wage provisions, but exempt from the overtime provisions. Nearly everyone is covered by the minimum-wage provision. However, some of these covered workers may be exempt from the general requirement that employers pay overtime to employees who work over 40 hours per week.

Question 7

The Fair Labor Standards Act?

Accepted Answer

This Act contains maximum hours and minimum wage provisions. It also sets minimum ages for working various jobs, and sets rules for paying overtime (to non-exempt workers who work more than 40 hours a week).

Question 8

Which of the following Acts prohibit(s) an employer from discriminating among employees based on gender? The Equal Pay Act. Title VII of the Civil Rights Act.

Accepted Answer

BOTH. The Equal Pay Act guarantees equal pay for equal work done by a worker of either gender. The Civil Rights Act is much broader, but also addresses this issue by ensuring equality in hiring, firing, promotion, and compensation.

Question 9

Under the Fair Labor Standards Act, which of the following pay bases may be used to pay covered, non-exempt employees who earn, on average, the minimum hourly wage? Hourly Weekly Monthly

Accepted Answer

ALL 3. The FLSA does not prohibit any of these pay periods. It ensures that a worker's total compensation is not below a certain level, but wages may be paid on an hourly, weekly, or monthly basis.

Question 10

Under the Federal Fair Labor Standards Act, which of the following would be regulated? Minimum wage. Overtime Number of hours in the working week.

Accepted Answer

All 3. This is the Act that sets a minimum wage for most workers. Also, the Act requires that most workers be paid overtime if they work more than 40 hours in a given week.

Question 11

While on vacation, Massey is severely injured in a motorcycle accident. Which of the following is true? Because he was not injured on the job, Massey is ineligible for disability benefits under the Social Security system. In order to be eligible for benefits, Massey must be prevented from working for a year or more. Massey is under 65, so he is ineligible for benefits. A and C.

Accepted Answer

In order to be eligible for benefits, Massey must be prevented from working for a year or more. The disability must be sufficiently serious to prevent the applicant from working for at least a year, so this answer is accurate.

Question 12

Syl Corp. does not withhold FICA taxes from its employees' compensation. Syl voluntarily pays the entire FICA tax for its share and the amounts that it could have withheld from the employees. The employees' share of FICA taxes paid by Syl to the IRS is Deductible by Syl as additional compensation that may be included in the employees' taxable income. Not deductible by Syl, because it does not meet the deductibility requirement as an ordinary and necessary business expense. A non-taxable gift to each employee, provided that the amount is less than $1,000 annually to each employee. Subject to prescribed penalties imposed on Syl for its failure to withhold required payroll taxes.

Accepted Answer

Deductible by Syl as additional compensation that may be included in the employees' taxable income. The IRS does not let workers escape tax liability that easily. Employees are required under FICA to contribute around 7.5% of their earnings. If this amount is paid for them, it is a very real increase in their "pay," and is therefore treated as income. Syl, then, may deduct these amounts as paid income.

Question 13

An employer who fails to withhold Federal Insurance Contributions Act (FICA) taxes from covered employees' wages, but who pays both the employer and employee shares would Be entitled to a refund from the IRS for the employees' share. Be allowed no federal tax deduction for any payments. Have a right to be reimbursed by the employees for the employees' share. Owe penalties and interest for failure to collect the tax.

Accepted Answer

Have a right to be reimbursed by the employees for the employees' share. If both halves are paid by the employer, the employer has a right to recover half of the expense from the EMPLOYEE, but not the IRS.

Question 14

Tower drives a truck for Musgrove Produce, Inc. The truck is owned by Musgrove. Tower is paid on the basis of a formula that takes into consideration the length of the trip, cargo, and fuel consumed. Tower is responsible for repairing or replacing all flat tires. Musgrove is responsible for all other truck maintenance. Tower drives only for Musgrove. If Tower is a common-law employee and not an independent contractor, which of the following statements is correct? All Social Security retirement benefits are fully includible in the determination of Tower's federal taxable income if certain gross-income limitations are exceeded. Musgrove remains primarily liable for Tower's share of FICA taxes if it fails to withhold and pay the taxes on Tower's wages. Musgrove would not have to withhold FICA taxes if Tower elected to make FICA contributions as a self-employed person. Bonuses or vacation pay that are paid to To

Accepted Answer

Musgrove remains primarily liable for Tower's share of FICA taxes if it fails to withhold and pay the taxes on Tower's wages. Ignore all of the information about the relationship, because the question tells us the important thing: Tower is an employee. An employer must either deduct FICA taxes or pay them for ALL employees. So long as a person is not classified as an independent contractor, these taxes are due one way or the other.

Question 15

Which of the following types of income is subject to taxation under the provisions of the Federal Insurance Contributions Act (FICA)? A. Interest earned on municipal bonds. B. Capital gains of $3,000. A vehicle received as a productivity award. Dividends of $2,500.

Accepted Answer

A vehicle received as a productivity award. Social security is set up to help retirees with their loss of earned income. Generally, to be subject to FICA taxes, the income must be earned in the course of employment. This does not mean that only traditional wages are taxed. A car earned as a bonus is still very much a benefit realized in the course of employment, and so the value of the car will be the basis for FICA taxes. Dividends are exempt from FICA taxes. Social security is set up to help retirees with their loss of earned income. Generally, to be subject to FICA taxes, the income must be earned in the course of employment, which dividends are not.

Question 16

After serving as an active director of Lee Corp. for 20 years, Ryan is appointed an honorary director, with the obligation to attend directors' meetings, but with no voting power. In 2005, Ryan receives an honorary director's fee of $5,000. This fee is Reportable by Lee as employee compensation subject to Social Security tax. Reportable by Ryan as self-employment income subject to Social Security self-employment tax. Taxable as "other income" of Ryan, not subject to any Social Security tax. The $5,000 is considered to be a gift not subject to Social Security self-employment or income tax.

Accepted Answer

Reportable by Ryan as self-employment income subject to Social Security self-employment tax. Because he has no voting power, Ryan is not an "employee" of the corporation, and the $5,000 is not employee compensation. He is receiving the money for doing something, however, because he is obligated to attend the meetings. This obligation makes his $5,000 income, and not a gift. Because he is not an employee of the corporation, this amount is self-employment income, which is subject to both self-employment tax and Social Security tax.

Question 17

Assume that the maximum wage base for FICA is $100,000. Jill earns $50,000 while working for MaximumEd Corporation. Jill also has her own business on the side, making $100,000 net. Upon what amount must Jill pay taxes under the Self-Employment Contributions Act? $150,000. $100,000. $50,000. None of the above.

Accepted Answer

C. $50,000. The maximum wage base for FICA is reduced by the amount Jill paid through other means. She and MaximumEd both paid their share on the $50,000 that she made working for MaximumEd. Therefore, Jill should have to pay taxes under SECA on only $50,000, so this is the correct answer.

Question 18

Assume that the maximum wage base for FICA is $100,000 and that the tax rate is 6.20% of Social Security and 1.45% for Medicare. Employers and employees share the tax equally, meaning that both pay 7.65%. Which of the following is true for Joe, a self-employed person? Joe must pay 15.3% (7.65% in his role as employer and 7.65% in his role as employee) under the Self-Employment Contributions Act of 1954. In calculating his "net earnings from self-employment" that will be subject to the tax, Joe may subtract 7.65% of his gross earnings to account for the fact that employees do not get taxed on their employers' contribution to the second half of FICA, so self-employed persons should not be taxed on that half of their contribution either. A and B. None of the above.

Accepted Answer

A and B

Question 19

Last year, Mary made money by selling quilts that she quilted out of her home, by serving on the Board of Directors of her sister's company, and by receiving gifts from her rich uncle. Which of these are subject to Self-Employment Contributions Act (SECA)? The net profits made selling quilts. The director's fees. The gifts from Mary's uncle. A and B.

Accepted Answer

A and B.

Question 20

Randolph has a bad year with his business, a sole proprietorship, which he runs out of his home. However, his rich aunt, who worries about him, gives Randolph $250,000 in July. Which of the following is true? Randolph must pay tax under SECA on the $250,000. Randolph need not pay tax under SECA on the $250,000 because it is not "income." Neither A nor B. All of the above.

Accepted Answer

Randolph need not pay tax under SECA on the $250,000 because it is not "income." Gifts are "passive" income and not covered by SECA.

Question 21

Taxes payable under the Federal Unemployment Tax Act (FUTA) are Partially deductible by the covered employee for federal income-tax purposes. Calculated as a fixed percentage of all compensation paid to an employee. Payable by all employers, regardless of the total amount of compensation paid to individual employees. Deductible by the employer as a business expense for federal income-tax purposes.

Accepted Answer

Deductible by the employer as a business expense for federal income-tax purposes. An employer pays for all obligations under FUTA and the employees do not contribute out of their paychecks. These taxes are fully deductible by the employer when the employer calculates federal income taxes.

Question 22

An unemployed CPA would generally receive unemployment compensation benefits if the CPA Was fired as a result of the employer's business reversals. Refused to accept a job as an accountant while receiving extended benefits. Was fired for embezzling from a client. Left work voluntarily without good cause.

Accepted Answer

Was fired as a result of the employer's business reversals. Unemployment compensation is given to persons who lose their jobs and are not fired for cause. If an employer changes or "downsizes" his business, the newly laid-off worker is generally eligible for benefits.

Question 23

A return must be filed under FUTA if there are ANY employees during a substantial portion of the year. What is the time frame.

Accepted Answer

If a full OR part-time employee is around for over _20 weeks in a given year_ , a return must be filed.

Question 24

An employer having an experience unemployment tax rate of 3.2% in a state having a standard unemployment tax rate of 5.4% may take a credit against a 6.2% federal unemployment tax rate of 3.0% 3.2% 5.4% 6.2%

Accepted Answer

5.4% 6.2%. Therefore, all 5.4% of the state's standard unemployment tax rate may be credited against the federal percentage.

Question 25

The Federal Unemployment Tax Act (FUTA) Requires both the employer and employee to pay FUTA taxes, although the amounts to be paid by each are different. Does not apply to businesses with fewer than 35 employees. Does not apply to employers that conduct business only in one state and employ only residents of that state. Allows the employer to take a credit against the FUTA tax if contributions are made to a state unemployment fund.

Accepted Answer

Allows the employer to take a credit against the FUTA tax if contributions are made to a state unemployment fund. Many states run their own unemployment fund and require employers to make contributions to it. If such is the case, the employer does not have to pay more overall unemployment tax. The employer may credit the amounts paid to a state fund against contributions required by the federal government.

Question 26

In which of the following situations might CPAs be sued with regard to their activities relating to pension and other benefit plans? A CPA exercises discretionary management or control over management of a plan and invests its funds in the stock of a company in which the CPA holds an undisclosed controlling interest. A CPA participates in a transfer of plan assets to the plan's lawyers for less than fair value. An auditor carelessly audits a plan, missing the fact that a fiduciary has been flagrantly embezzling, and is sued under state malpractice law. All of the above.

Accepted Answer

All of the above. A CPA who exercises such discretionary control becomes a "fiduciary" of the plan and could be liable for breaching that fiduciary obligation by having such a conflict of interest.

Question 27

Under the Federal Consolidated Budget Reconciliation Act (COBRA), when an employee voluntarily resigns from a job, the former employee's group health insurance coverage that was in effect during the period of employment with the company Automatically ceases for the former employee and spouse, if the resignation occurred before normal retirement age. Automatically ceases for the former employee's spouse, but continues for the former employee for an 18-month period at the former employer's expense. May be retained by the former employee at the former employee's expense for at least 18 months after leaving the company, but must be terminated for the former employee's spouse. May be retained for the former employee and spouse at the former employee's expense for at least 18 months after leaving the company.

Accepted Answer

May be retained for the former employee and spouse at the former employee's expense for at least 18 months after leaving the company. COBRA protects workers from losing benefits if they quit a job, are laid off, or are fired for a reason other than gross misconduct. It does not, however, require the former employer to continue paying for the benefits; this becomes the responsibility of the former employee.

Question 28

Edna suspects there is even more to the question of how accountants can become liable as plan fiduciaries. Which of the following accountants might assume such a status and its attendant liability? Providing advice about management of the plan in a setting where it is nearly certain that the company will follow the accountant's advice. Providing regular consulting services to the client regarding plan administration. Exercising discretionary control over plan funds. All of the above.

Accepted Answer

All of the above.

Brainscape's Knowledge GenomeTM

Regulation of Employment and Environment Flashcards

Brainscape's Knowledge Genome^TM