FPC ACTUAL 2026 CORE EXAM TEST QUESTIONS AND
ANSWERS GRADED A+
✔✔all of the following issues are concerns of external auditors except:
a. safeguarding of the firms financial assets
b. risks to the companys financial well being
c. efficiency of payroll procedures
d. material misstatements of financial statements - ✔✔c. efficiency of payroll procedures
✔✔in order to set up dd of payroll, you need which 3 pieces of info? - ✔✔type of
account (checking/savings)
routing #
account #
✔✔what is the correct chronological sequence for the following events associated with
DD?
1. company creates ACH file
2. employee receives deposits in his or her bank accounts
3. company collects employee info
4. originating financial institution transmits data
5. settlement through ACH - ✔✔3, 1, 4, 5, 2
✔✔All of the following regulate payments made by DD EXCEPT:
a. consumer financial protection bureau
b. NACHA
C. State laws
d. local laws - ✔✔d. local laws
the consumer financial protection bureaus regulation E allows the use of electronic
funds transfer. NACHA provides the operational rules for EFT. state laws facilitate the
payment process
✔✔which of the following employee benefits is nontaxable compensation?
a. company vehicle (personal use)
b. gifts, prizes awards
c. company vehicle (business use)
d. moving expense - ✔✔c. company vehicle (business use)
of these, only the business use of a company vehicle is a nontaxable. the tax treatment
of certain fringe benefits (like company vehicles, educational assistances, thirs party
sick pay, or GTLI) can get complicated. unless otherwise specific, fringe benefits are
taxable
✔✔which of the following employee benefits is taxable compensation?
a. workers compensation benefits
,b. health savings account
c. sick pay
d. qualified transportation fringes - ✔✔c. sick pay
of these, sick pay is taxable. the other benefits are excluded from income by law
✔✔an employee's most recent pay period began on Dec 15, 2020 and ended on dec
31, 2020. the employee was paid on jan 7, 2021. in what year are his wages earned
between dec 15, 2020 and dec 31 2020, included in his taxable wages? - ✔✔2021
wages are included in taxable income when paid on date
✔✔an employee was sick the last week in december. his paycheck, dated dec 31, 2020
was held for him until he returned to work on Jan 6, 2021. these wages are taxable:
a. in 2020
b. in 2021 - ✔✔a. in 2020
since the employees paycheck was available in 2020, according to the concept of
constructive receipt, these wages are taxable in 2020.
✔✔in what part of a 2020 form w4 does an employee claim dependents?
a. step 3
b. writing below step 4c
c. step 2
d. dependents are not claimed on form W4 - ✔✔A. step 3
✔✔All of the following are supplemental wages EXCEPT:
a. salary
b. bonus
c. commission
d. fringe benefits - ✔✔a. salary
✔✔When using the Optional Flat Rate Method, which of the following items is
considered when making the calculation?
a. taxable wages
b. pay frequency
c. filing status
d. number of dependents - ✔✔a. taxable wages
when using the optional flat rate, only the taxable wages is used in the calculation.
✔✔When paying supplemental wages, when must the aggregate withholding method be
used?
a. when no income tax is withheld from regular wages for the current or preceding year
b. when the employee claims more than 10 dependents
, c. when the employee doesnt complete a form W4
d. when the employee claims heads of household - ✔✔a. the IRS requires the use of
the aggregate method where no income tax has been withheld in the current of
preceding year
✔✔When an employee is overpaid and the repayment occurs in the same year, the
repayment requested is the employee's
a. net overpayment
b. gross overpayment
c. gross overpayment minus social security and medicare tax
d. gross overpayment minus federal income tax - ✔✔a. net overpayment
when an employee is overpaid and the repayment occurs in the same year, the
repayment requested is the employee's net overpayment
✔✔what form must a penisioner file to have input into the amount of federal income tax
withheld?
a. w4
b. w4P
c. w4s
d. w9 - ✔✔b. W4P
✔✔when an employee begins to receive social security benefits, the employer no longer
needs to withhold social security and medicare taxes.
true
false - ✔✔FALSE
✔✔in 2020, an employer must pay social security tax on an employees wages up to:
a. 127,200
b. $128,400
c. 132,900
d. 137,700 - ✔✔D. $137,700
✔✔what is the employer's social security tax rate in 2020?
a. 1.45%
b. 6.2$
c. 7.65%
d. 12.4% - ✔✔6.2%
✔✔A voluntary deduction must be:
a. authorized by the employee
b. deducted without the employee's permission
c. changed to what the employer needs to deduct - ✔✔a. authorized by the employee
ANSWERS GRADED A+
✔✔all of the following issues are concerns of external auditors except:
a. safeguarding of the firms financial assets
b. risks to the companys financial well being
c. efficiency of payroll procedures
d. material misstatements of financial statements - ✔✔c. efficiency of payroll procedures
✔✔in order to set up dd of payroll, you need which 3 pieces of info? - ✔✔type of
account (checking/savings)
routing #
account #
✔✔what is the correct chronological sequence for the following events associated with
DD?
1. company creates ACH file
2. employee receives deposits in his or her bank accounts
3. company collects employee info
4. originating financial institution transmits data
5. settlement through ACH - ✔✔3, 1, 4, 5, 2
✔✔All of the following regulate payments made by DD EXCEPT:
a. consumer financial protection bureau
b. NACHA
C. State laws
d. local laws - ✔✔d. local laws
the consumer financial protection bureaus regulation E allows the use of electronic
funds transfer. NACHA provides the operational rules for EFT. state laws facilitate the
payment process
✔✔which of the following employee benefits is nontaxable compensation?
a. company vehicle (personal use)
b. gifts, prizes awards
c. company vehicle (business use)
d. moving expense - ✔✔c. company vehicle (business use)
of these, only the business use of a company vehicle is a nontaxable. the tax treatment
of certain fringe benefits (like company vehicles, educational assistances, thirs party
sick pay, or GTLI) can get complicated. unless otherwise specific, fringe benefits are
taxable
✔✔which of the following employee benefits is taxable compensation?
a. workers compensation benefits
,b. health savings account
c. sick pay
d. qualified transportation fringes - ✔✔c. sick pay
of these, sick pay is taxable. the other benefits are excluded from income by law
✔✔an employee's most recent pay period began on Dec 15, 2020 and ended on dec
31, 2020. the employee was paid on jan 7, 2021. in what year are his wages earned
between dec 15, 2020 and dec 31 2020, included in his taxable wages? - ✔✔2021
wages are included in taxable income when paid on date
✔✔an employee was sick the last week in december. his paycheck, dated dec 31, 2020
was held for him until he returned to work on Jan 6, 2021. these wages are taxable:
a. in 2020
b. in 2021 - ✔✔a. in 2020
since the employees paycheck was available in 2020, according to the concept of
constructive receipt, these wages are taxable in 2020.
✔✔in what part of a 2020 form w4 does an employee claim dependents?
a. step 3
b. writing below step 4c
c. step 2
d. dependents are not claimed on form W4 - ✔✔A. step 3
✔✔All of the following are supplemental wages EXCEPT:
a. salary
b. bonus
c. commission
d. fringe benefits - ✔✔a. salary
✔✔When using the Optional Flat Rate Method, which of the following items is
considered when making the calculation?
a. taxable wages
b. pay frequency
c. filing status
d. number of dependents - ✔✔a. taxable wages
when using the optional flat rate, only the taxable wages is used in the calculation.
✔✔When paying supplemental wages, when must the aggregate withholding method be
used?
a. when no income tax is withheld from regular wages for the current or preceding year
b. when the employee claims more than 10 dependents
, c. when the employee doesnt complete a form W4
d. when the employee claims heads of household - ✔✔a. the IRS requires the use of
the aggregate method where no income tax has been withheld in the current of
preceding year
✔✔When an employee is overpaid and the repayment occurs in the same year, the
repayment requested is the employee's
a. net overpayment
b. gross overpayment
c. gross overpayment minus social security and medicare tax
d. gross overpayment minus federal income tax - ✔✔a. net overpayment
when an employee is overpaid and the repayment occurs in the same year, the
repayment requested is the employee's net overpayment
✔✔what form must a penisioner file to have input into the amount of federal income tax
withheld?
a. w4
b. w4P
c. w4s
d. w9 - ✔✔b. W4P
✔✔when an employee begins to receive social security benefits, the employer no longer
needs to withhold social security and medicare taxes.
true
false - ✔✔FALSE
✔✔in 2020, an employer must pay social security tax on an employees wages up to:
a. 127,200
b. $128,400
c. 132,900
d. 137,700 - ✔✔D. $137,700
✔✔what is the employer's social security tax rate in 2020?
a. 1.45%
b. 6.2$
c. 7.65%
d. 12.4% - ✔✔6.2%
✔✔A voluntary deduction must be:
a. authorized by the employee
b. deducted without the employee's permission
c. changed to what the employer needs to deduct - ✔✔a. authorized by the employee
