The Payroll Source CPP Practice Exam

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• The flat percentage method commonly uses which rate for supplemental wages?
• Which of the following describes the withholding method when there has been no prior supplemental wages and the payment is up to $1,000,000?
• If the IRS indicates an employee's W-4 is invalid, what action must the employer take?
• To convert a net bonus to gross when a fixed total withholding rate applies, you divide the net amount by (1 minus the total withholding rate). Which option describes this calculation?
• What is the Additional Medicare Tax and when does it apply?
• FUTA taxes are reported on which form annually?
• Which step is LEAST important during the parallel testing phase of a new payroll system?
• What is the regular rate vs total compensation concept in overtime?
• What major change did the 2020 Form W-4 redesign implement?
• What is the best reason for tracking pay-related problem statistics?
• In the federal wage calculation example, which item reduces the federal taxable wages?
• What is the FICA tax rate applied to gross wages in the calculation?
• How should tips be reported for tax purposes?
• What is the effect of failing to record salaries that are earned but not paid at the end of an accounting period?
• Which of the following is NOT an advantage of having an in-house developed payroll/HR system?
• Which statement correctly identifies the two components of FICA payroll taxes and their standard employee rates (excluding the Additional Medicare Tax)?
• In a company with strong internal controls, what is the primary responsibility of the payroll department manager?
• Which of the following describes final pay for a terminated employee?
• In the withholding calculation using the 2017 percentage method, which deduction reduces the wage base for federal income tax withholding?
• What is the FUTA rate and wage base, and how do SUTA credits affect the net FUTA rate?
• Using the federal child support guidelines in the example, what percentage of disposable earnings is used to determine the maximum withholding?
• In payroll reconciliation, which documents are compared to verify accuracy?
• Which of the following is NOT a local tax that payroll might withhold?
• A request for proposal (RFP) can be used to:
• In the scenario described, what is the employee's net pay?
• When checking for phantom employees, which action should be taken?
• In the weekly payroll example, what is the overtime premium per hour used in the calculation?
• During system implementation, parallel testing is used to verify that critical payroll processes function correctly by running both the old and new systems side-by-side before full migration.
• How does the Social Security wage base limit affect FICA taxes?
• At the end of an accounting period, a company has a debit balance in a liability account. What does this indicate?
• Which statement about the aggregate method for withholding supplemental wages is true?
• What is the purpose of the payroll accrual entry?
• In a customer service situation, Payroll should:
• All of the following techniques would enhance the level of customer service EXCEPT:
• Beyond reducing errors, what is another key advantage of an automated time and attendance system?
• A payroll register shows gross earnings of $300,000 and deductions of $120,000. What is the entry to the payroll expense account?
• Regarding a federal tax levy, which statement is true?
• How is local tax withholding determined for employees who work in multiple jurisdictions?
• Which method is the BEST way to control miscellaneous payments when using online input?
• Using the 2017 percentage method withholding tables, calculate the employee's withheld federal income tax based on the data: Weekly pay frequency; Vacation earnings: $360.62; Regular compensation: $239.38; 401(k) pre-tax deferral: $48.50; Married, 0 allowances
• Which form is used to report employees' wages including tips for payroll reporting?
• Why are deadlines for payroll data input documents essential?
• An employee is nonexempt and earns $20 per hour. They worked 45 hours in a workweek. What is the total overtime pay?
• Which of the following statements about Schedule B on Form 941 is correct?
• Which form is used to request an employer identification number?
• Should paid time off count toward the 40-hour overtime threshold?
• Which form may be submitted to the IRS to obtain a written determination of a worker's status as an employee or independent contractor?
• For how many years must the employer keep the copy of Form 940?
• Which outcome is most aligned with selecting a vendor payroll package?
• Transactions are recorded in chronological order into books of original entry called?
• Which payroll record is specifically noted as needing four-year retention in the provided guidance?
• What form is used to report unemployment taxes to the IRS?
• Which form must be used to report mistakenly paid wages for which no repayment is made?
• When determining the value of employer-provided parking, which valuation method is allowed?
• What is the chief advantage of a vendor payroll package?
• At least how often must employers report noncash fringe benefits as income for federal tax withholding purposes?
• Which taxes are included on Form 941?
• What is the key difference between a wage levy and a wage garnishment?
• What is a household employee, and what tax form is used to report wages for such employees?
• What forms are used to report employee annual wages and tax withholdings to the government?
• Define gross pay, pre-tax deductions, and net pay.
• Which items are included in the regular rate of pay for overtime calculations?
• Which items should be included on a pay stub?
• Under the Fair Labor Standards Act, a workweek is defined as
• 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?
• In accounting, the fact that a transaction affects two separate accounts is called what?
• What is the effect of adding a per-hour shift differential to the base rate for eligible shifts?
• Which term describes the flow of information from staff to management?
• How are salaries reflected on the income statement?
• Regarding employees' reported tips, which statement is correct regarding tax reporting and withholding?
• A company has a gross payroll of $120,589.36 that is taxable for federal income, social security, and medicare taxes. Federal income tax withheld is $24,117.87; combined social security and medicare taxes withheld are $9,225.09. What is the company's total payroll tax liability for this pay period?
• Under the Fair Labor Standards Act, the pay cycle for nonexempt employees can be on which of the following?
• When withholding for a multi-state employee, the withholding is based on which factor?
• Which statement about employer matching for FICA taxes is true?
• How should an employer handle wage garnishments for child support?
• What information does Form 1095-C contain for employees?
• Penalties for failure to make timely deposits are determined by?
• Using the 2017 percentage method withholding tables, which pay frequency is used in the example?
• How is a paycheck stub used in payroll reconciliation?
• In the payroll tax calculation example, which component is included in the total payroll tax liability along with federal income tax withheld?
• Which of the following is NOT a typical use of a request for proposal (RFP)?
• Which data element is NOT required to be maintained in the employee master file?
• If an employee uses 8 hours of paid time off in a 40-hour workweek, how many overtime hours result?
• Which form is used to report federal payroll taxes on a quarterly basis, and what is the typical deposit schedule?
• What is 409A and why is it important?
• What is a de minimis fringe benefit and how is it treated for tax purposes?
• A net bonus of $2,000 is paid as supplemental wages in a no-income-tax state. Using the current option flat tax rate and the Social Security and Medicare rates, what is the gross amount of the payment?
• Under what condition are employer-sponsored athletic facilities considered nontaxable fringe benefits?
• The KEY advantage of using an automated time and attendance system is that it:
• Is the Additional Medicare Tax matched by the employer?
• Which form and schedule are used to report household employment taxes?
• What are the purposes of Form 941 Schedule B and Form 940 in payroll compliance?
• An employee with COBRA continuation rights for which duration?
• Do elective deferrals to a 401(k) plan reduce federal income tax withholding and FICA taxes?
• To comply with four-year records retention, which agency's regulations apply?
• Employee deferrals under section 401(k) are subject to which taxes?
• Which of the following is a local tax that payroll might withhold?
• Garnishments priority when multiple orders apply?
• Which item represents an input interface to the payroll system?
• Which factor provides system security in payroll processing?
• What is Schedule H used for and when is it filed?
• Upward communication involves which of the following?
• A time record is signed by an employee as part of the payroll process. This action primarily indicates which of the following?
• Under FLSA, what is the compensation due for an employee paid $8 per hour for 52 hours in a workweek with 8 hours of sick pay?
• In a biweekly pay period, an employee earns $10.20 per hour with 80 regular hours, 4 overtime hours, and 3 double-time hours, plus a $50 401(k) deferral. What are the federal income taxable wages?
• How are supplemental wages taxed for federal income tax withholding?
• How often are Form 940 taxable wages reported?
• To exhibit good customer service skills, payroll staff must understand and be able to explain:
• Which of the following records MUST be kept for the four years?
• Which statement best describes the primary reason to opt for a vendor payroll package?
• Under the FLSA, which element is specifically used as the multiplier in overtime calculation?
• Which form is used to report wages and withholding to employees on an annual basis?
• All of the following steps are required when initiating direct deposit for an employee EXCEPT:
• How is ACA affordability determined for an employer?
• Which security practice is NOT recommended for payroll systems?
• Which item is NOT included on Form 1095-C?
• What is a Section 125 plan (cafeteria plan)?
• What is a household employee?
• How often must noncash fringe benefits be reported for federal tax withholding purposes?
• When paying supplemental wages along with regular wages WITHOUT specifying the amount of each, how would withholding be determined if the employee has not been paid any supplemental wages earlier this year and the supplemental wage payment is no more than $1,000,000?
• Which forms are used for ACA health coverage reporting?
• What is the difference between a 401(k) plan and a 403(b) plan?
• Which statement best describes ACA reporting form transmission?
• Which components are included in the regular rate for overtime calculations?
• What is the combined employee-side rate for Social Security and Medicare taxes in the example?
• Which form is used to report wages for a household employee, and what additional form might be required?
• Which statement is true about HSAs and FSAs?
• Using federal child support guidelines, calculate the maximum amount of support that can be withheld from an employee's semimonthly disposable earnings of $1,500.00. The employee is four months in arrears in making child support payments and has no other dependents.
• Which document proves an employee's identity and authorization to work?
• The proper handling of a stop payment includes all of the following steps EXCEPT:
• Which type of report is created on demand and is not part of the standard system reports?
• What is the effect of pre-tax deductions on federal taxable wages?
• How does a tip credit affect minimum wage?
• Disaster recovery planning should include which element to ensure payroll continuity?
• Under the semiweekly deposit rule, if a liability of $110,000 is incurred on Wednesday, when is the deposit due?
• A team comprised of members of a department's staff with the intention of improving their own process is a ...
• Which item does NOT qualify as a de minimis fringe benefit?
• An employee earns $9 per hour plus $0.10 per hour for hours worked after 7:00 p.m. If the employee works from 2:00 p.m. to 11:00 p.m., with an unpaid meal break from 6:00 p.m. to 7:00 p.m., Monday through Friday, what is the employee's weekly gross pay under the Fair Labor Standards Act?
• Techniques for conducting periodic physical payouts:
• Which describes a self-insured workers' compensation plan?
• Which practice is NOT acceptable to an external auditor?
• Which type of plan involves sending production files and payroll transactions to a remote location for disaster recovery?
• To ensure payroll continuity after a disruption, which feature is essential?
• What is the total gross pay before deductions in the example scenario?
• Under the Family and Medical Leave Act, employers must maintain employee records for at least how long?
• Which of the following practices is a strong internal control procedure?
• Using the percentage method, total biweekly deductions for federal income, social security and Medicare taxes?
• Which action helps ensure payroll accuracy when handling reimbursements?
• Which describes a cafeteria plan under section 125 of the Internal Revenue code?
• One element of the payroll calendar is:
• In payroll accounting, which amount should be used as the basis for the payroll expense entry on the income statement?
• On Form W-4, if an employee claims two allowances, this typically results in:
• A Health Savings Account is typically paired with which health plan, and what is a key feature?
• Final pay should include which items and be paid by when?
• What is the primary difference between user guides and payroll policies and procedures?
• A local national is defined as an employee who:
• An employee who has exceeded the Social Security wage base may take a credit against federal income tax on Form 1040.
• What is the primary advantage of developing an in-house system?
• Which statement about ACA affordability penalties is accurate?
• Which item would not be included in the regular rate for overtime calculations?
• Calculate the gross pay under the FLSA given the following: hourly rate $8.00, production bonus $25.00, shift differential $0.25 per hour, and 44 total hours worked.
• Which compensation type is not subject to Social Security taxes?
• Statutory workers' compensation payments are exempt from which taxes?
• When valuing employer-provided parking, which method is allowed?
• Which statement best captures the key internal controls for payroll?
• Which best defines nonexempt status under the FLSA?
• Documenting payroll policies and procedures will provide all of the following results EXCEPT:
• In the withholding example, what is the total gross pay before any pre-tax deductions?
• A department-based team dedicated to improving its own processes is called a ...
• Allocations when an employee works in multiple jurisdictions may be required. Which option describes this correctly?
• How may federal income tax be withheld from separation pay and accrued vacation wages paid at termination when identified separately on the employee's pay stub?
• Under the Fair Labor Standards Act (FLSA), how long are employers required to keep records related to wages, hours, and conditions of employment?
• An employee terminated with 3 workdays remaining in a month; annual salary $24,000; paid semimonthly. What is the regular compensation due this employee for the final pay period?
• Which statement correctly describes an accountable plan for reimbursements?
• Which action does NOT demonstrate a strong customer service orientation?
• An nonexempt employee earns $400 per week for a 35-hour baseline. If they work 48 hours, what is the total due under FLSA?
• To build morale and motivate staff, a manager should
• Which item determines the disposition of unclaimed wages?
• What tax does Form 940 report?
• 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 testing?
• Which term describes the process of balancing multiple time sheets within a single pay period?
• Which combination allows an employer to exclude a business reimbursement from income?
• For federal income tax withholding on bonuses in the scenario, which method is used?
• All of the following practices are acceptable to an external auditor EXCEPT:
• What is the primary objective of a disaster recovery plan in payroll information systems?
• Form 941 Schedule B is used to track liabilities by deposit schedule; Form 940 reports FUTA unemployment taxes. Which option best describes this purpose?
• When an employee is hired by a second employer in the same year after earnings with a first employer, how should the second employer treat the employee's earnings as of the first wage payment?
• Payroll tax expense appears in the company's financial statements in which place?
• Which of the following is NOT a required step when initiating direct deposit for an employee?
• A payroll department manager should assure:
• Under federal law, how long must payroll records be retained?
• Which rates are included in the current option flat tax rate used to calculate gross-up for supplemental wages when no state tax applies?
• In payroll security, which measure is most directly aimed at preventing unauthorized access to payroll data?
• An employee not eligible for direct deposit receives pay by mailed checks. When is the employee constructively paid?
• Which option best describes a report that is requested to cover a specific data range not included in standard reports?
• What amount is withheld as a 401(k) elective deferral from a $2,000 regular wage at 5%?
• Which practice best strengthens internal controls over payroll processing?
• Which taxes are reported on Form 941 quarterly?
• How does tip pooling affect reporting and withholding?
• In evaluating the security of a newly implemented payroll system, which control is least likely to be a security measure?
• Why are deadlines for payroll data input documents important?
• Noncash fringe benefits are generally taxable to the employee unless what is specified by law or policy?
• Form 1095-C is used to document which elements related to health coverage?
• What is the difference between the aggregate method and the percentage method for withholding supplemental wages?
• One reason many companies use a Zero Balance Checking Account is that:
• Wages for which category may be reported on a W-2 if applicable?
• 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?
• How is a multi-state payroll typically handled?
• Which statement about a Section 125 cafeteria plan is true?
• What is included on Form W-2?
• An employee is paid $10 per hour plus a 10% differential for evening shifts. During the past week, the employee worked 24 hours on the day shift and 24 hours on the evening shift. Under the FLSA, what are the employee's gross wages for the week?
• How many pay periods are there per year for an employee with an annual salary of $24,000 who is paid semimonthly?
• Which authority dictates the information provided on a payroll check stub?
• Payroll system user documentation should include which of the following?
• Which option correctly identifies the accounting method described as recording each transaction in two accounts?
• Which statement best describes payroll record retention?
• Under the Fair Labor Standards Act (FLSA), which statement best describes exempt versus nonexempt employees?
• One employment data element in the payroll masterfile is:
• What is the standard employee FICA tax rate for OASDI and Medicare combined, excluding the Additional Medicare Tax?
• In 2017, an employee earned wages of 38,000, 47,000, and 50,000 from three employers. What is the total Social Security and Medicare tax withheld from all wages?
• What is the general purpose of Form 1099-NEC?
• An employee who works for more than one employer and has exceeded the Social Security wage base may:
• Which statement best defines a household employee?
• Which documentation data is commonly used as input data for payroll calculations?