FUNDAMENTAL PAYROLL CERTIFICATION ACTUAL
EXAM QUESTIONS AND ANSWERS (VERIFIED AND
WELL DETAILED ANSWERS) LATEST UPDATE 2025/2026
Reliability
Responsiveness
Assurance
Empathy
Tangibles - CORRECT ANSWER Principles of Customer Service
Directions on the implementation of sections of the Internal Revenue Code -
CORRECT ANSWER Revenue Procedures
Directions on how the law will be enforced by the IRS - CORRECT ANSWER
Revenue Rulings
Directions to taxpayers asking for guidance on how the law will be enforced given
specific facts about the taxpayer. Can only be used by the requester. - CORRECT
ANSWER Private Letter Rulings
Every 3 years by exam or 60 Recert Credit Hours - CORRECT ANSWER FPC
Recertification
1) record each financial transaction as it occurs
2) post the transaction to the journal, then the GL
3) use data to prepare financial statements - CORRECT ANSWER Phases of
Accounting Process
,Sets the standard for recording financial transactions - CORRECT ANSWER
Financial Accounting Standings Board
Every organization that operates independently is treated as a business under this
concept. (GAAP) - CORRECT ANSWER Business Entity Concept
Assumes that a business will continue to continue to operate indefinitely as a
business. Assets would be valued as a cost of assets. If business is for sale they are
not "continuing concern" so assets would be valued at fair market value (GAAP) -
CORRECT ANSWER Continuing Concern Concept
Organization must determine its accounting period based on the type of business.
(GAAP) - CORRECT ANSWER Time period concept
Goods and services purchased are recorded at cost of acquiring. Can be measured
by dollars spent or equivalent in service provided. Remains at that value for its life
minus depreciation in accordance w/ continuing concern & objectivity principle
(GAAP) - CORRECT ANSWER Cost Principle
Transactions must be recorded objectively (valuing item at cost is example since
deal involves buyer & seller who have different goals in transaction (GAAP) -
CORRECT ANSWER Objectivity Principle
Expenses, revenue, and liabilities must be matched to the accounting period in
which they were earned or incurred. Expenses should always be recorded against
the revenues they produced (GAAP) - CORRECT ANSWER Matching Principle
Governs the recording of revenue - recognized and reported when when earned
(GAAP) - CORRECT ANSWER Realization Principle
,Transactions must be recorded in a consistent manner (GAAP) - CORRECT
ANSWER Consistency principle
Chronological record of daily transactions - for each transaction shows debit and
credit to each specific account - CORRECT ANSWER Journal
Record of business transactions by account - CORRECT ANSWER General
Ledger
anything of value owned by the company, normally has debit balances (ex -
Computers, Payroll software, $$ in payroll account) - CORRECT ANSWER
Assets Account
Debts - a claim against the company's assets and normally has credit balances (ex -
Taxes withheld but not deposited, contributions to 401k not yet paid) - CORRECT
ANSWER Liability Account
Cost of goods or services used in the process of obtaining revenue for company
and normally has debit balances (ex - salaries for EEs, cost of ER paid EE benefits,
ERs payroll taxes - CORRECT ANSWER Expense Account
2 other accounts held by businesses that typically don't affect payroll - CORRECT
ANSWER Revenue & Equity Accounts
Shows the CO's net income or loss for an accounting period - CORRECT
ANSWER P&L statement
Debit - Increase
, Credit - Decrease - CORRECT ANSWER Asset/Expense Account Recordings
Debit - Decrease
Credit - Increase - CORRECT ANSWER Liability/Revenue Account Recordings
Application for EIN - CORRECT ANSWER SS-4
Application for SS card - CORRECT ANSWER SS-5
Determination of Worker Status for purposes of fed employment taxes & income
tax withholding - CORRECT ANSWER SS-8
Wage and Tax Statement - CORRECT ANSWER W-2
Corrected Wage & Tax Statement - CORRECT ANSWER W-2c
Transmittal of Wage & Tax Statement - CORRECT ANSWER W-3
Employees Withholding Certificate - CORRECT ANSWER W-4
Withholding Certification for Pension or Annuity Payments - CORRECT
ANSWER W-4P
Request for Federal Income Tax Withholding from Sick Pay - CORRECT
ANSWER W-4S
EXAM QUESTIONS AND ANSWERS (VERIFIED AND
WELL DETAILED ANSWERS) LATEST UPDATE 2025/2026
Reliability
Responsiveness
Assurance
Empathy
Tangibles - CORRECT ANSWER Principles of Customer Service
Directions on the implementation of sections of the Internal Revenue Code -
CORRECT ANSWER Revenue Procedures
Directions on how the law will be enforced by the IRS - CORRECT ANSWER
Revenue Rulings
Directions to taxpayers asking for guidance on how the law will be enforced given
specific facts about the taxpayer. Can only be used by the requester. - CORRECT
ANSWER Private Letter Rulings
Every 3 years by exam or 60 Recert Credit Hours - CORRECT ANSWER FPC
Recertification
1) record each financial transaction as it occurs
2) post the transaction to the journal, then the GL
3) use data to prepare financial statements - CORRECT ANSWER Phases of
Accounting Process
,Sets the standard for recording financial transactions - CORRECT ANSWER
Financial Accounting Standings Board
Every organization that operates independently is treated as a business under this
concept. (GAAP) - CORRECT ANSWER Business Entity Concept
Assumes that a business will continue to continue to operate indefinitely as a
business. Assets would be valued as a cost of assets. If business is for sale they are
not "continuing concern" so assets would be valued at fair market value (GAAP) -
CORRECT ANSWER Continuing Concern Concept
Organization must determine its accounting period based on the type of business.
(GAAP) - CORRECT ANSWER Time period concept
Goods and services purchased are recorded at cost of acquiring. Can be measured
by dollars spent or equivalent in service provided. Remains at that value for its life
minus depreciation in accordance w/ continuing concern & objectivity principle
(GAAP) - CORRECT ANSWER Cost Principle
Transactions must be recorded objectively (valuing item at cost is example since
deal involves buyer & seller who have different goals in transaction (GAAP) -
CORRECT ANSWER Objectivity Principle
Expenses, revenue, and liabilities must be matched to the accounting period in
which they were earned or incurred. Expenses should always be recorded against
the revenues they produced (GAAP) - CORRECT ANSWER Matching Principle
Governs the recording of revenue - recognized and reported when when earned
(GAAP) - CORRECT ANSWER Realization Principle
,Transactions must be recorded in a consistent manner (GAAP) - CORRECT
ANSWER Consistency principle
Chronological record of daily transactions - for each transaction shows debit and
credit to each specific account - CORRECT ANSWER Journal
Record of business transactions by account - CORRECT ANSWER General
Ledger
anything of value owned by the company, normally has debit balances (ex -
Computers, Payroll software, $$ in payroll account) - CORRECT ANSWER
Assets Account
Debts - a claim against the company's assets and normally has credit balances (ex -
Taxes withheld but not deposited, contributions to 401k not yet paid) - CORRECT
ANSWER Liability Account
Cost of goods or services used in the process of obtaining revenue for company
and normally has debit balances (ex - salaries for EEs, cost of ER paid EE benefits,
ERs payroll taxes - CORRECT ANSWER Expense Account
2 other accounts held by businesses that typically don't affect payroll - CORRECT
ANSWER Revenue & Equity Accounts
Shows the CO's net income or loss for an accounting period - CORRECT
ANSWER P&L statement
Debit - Increase
, Credit - Decrease - CORRECT ANSWER Asset/Expense Account Recordings
Debit - Decrease
Credit - Increase - CORRECT ANSWER Liability/Revenue Account Recordings
Application for EIN - CORRECT ANSWER SS-4
Application for SS card - CORRECT ANSWER SS-5
Determination of Worker Status for purposes of fed employment taxes & income
tax withholding - CORRECT ANSWER SS-8
Wage and Tax Statement - CORRECT ANSWER W-2
Corrected Wage & Tax Statement - CORRECT ANSWER W-2c
Transmittal of Wage & Tax Statement - CORRECT ANSWER W-3
Employees Withholding Certificate - CORRECT ANSWER W-4
Withholding Certification for Pension or Annuity Payments - CORRECT
ANSWER W-4P
Request for Federal Income Tax Withholding from Sick Pay - CORRECT
ANSWER W-4S
