2025 FPC PAYROLL FUNDAMENTALS STUDY GUIDE EXAM
QUESTIONS EVALUATION WITH ANSWERS 2025/2026 GRADED A+
After-tax deduction - A deduction from an employee's pay that does not reduce the
employee's taxable wages. It is taken out only after all applicable taxes and other
deductions have been withheld (e.g., union dues, garnishments, charitable
contributions).
Escheat - In the context of payroll, the turning over of unclaimed wages to the state after
a period of time determined by state law.
Fluctuating workweek - An arrangement between an employer and a nonexempt
employee to pay the employee a fixed weekly salary even though the employee's hours
may vary from week to week.
FPC - Fundamentals of Payroll Certification
Validity Checks - Shows whether or not data entered meets the requirements set forth
by a company
Asks how independent is the employee and how much control can be exervised over
the worker. - Common Law Test
A worker cannot sign a new contract stating that they will be an indepndent contractor. -
Common Law Test
Employer has treated similar workers as independent contractors for any period and
has filed tax returns - Reasonable Basis Test
Longstanding industry standard of treating similar workers as independent contractors -
Reasonable Basis Test
Court decisions for treating workers in similar circumstances as independent contractors
- Reasonable Basis Test
IRS has ruled in a "published ruling" that the workers are indpendent contractors -
Reasonable Basis Test
Penalties for Violating IRCA - $375 for the first offence and $16,000 for the third
When must Section 1 of Form I-9 be completed? - The employee's date of hire.
When must Section 2 of Form 1-9 be completed? - Within three days of hiring the
employee.
Form SS-5 - Application for a social security card
Form I-9 - Employment Eligitability Verification
, Employee SSN verification is... - recommended but not required.
What information must an employer report for new hires? - Name, Date of Hire,
Address, SS, Employer's Name, Address, and EIN
Fair Labor Standards Act of 1938 (FLSA) - Guarantees employees a minimum wage,
requires employers to pay an overtime premium, limits when minors can work, and
provides equal pay protection.
Who is protected by FLSA? - Nonexempt employees
Minimum weekly salary required for exempt employees - $455
4 categories of exempt employees - Executives, Administrative Employee, Professional,
Outside Sales People
White Collar Employees - In the context of the Federal Wage-Hour Law, executive,
administrative, professional (including computer-related professionals), or outside sales
employees who are exempt from the law's minimum wage, overtime pay, and certain
record-keeping requirements.
Worker Classification - The process of determining whether an individual performing
services for a business is either an employee or an independent contractor
Working Condition Fringe - Benefits provided to an employee that are required for the
employee's job. These benefits are not taxable.
De minimis fringe benefit - An item provided infrequently by an employer to an
employee that is of small value. De minimis fringe benefits are never cash or cash
equivalents.
Constructive Receipt - An IRS rule that considers wages to be received by an employee
when the employee has access to the wages without substantial limitation or restriction
Batch Processing - Processing data as a group, either to increase controls or
processing efficiency
Common Law Test - A test that measures the right to control and direction that an
employer has the authority to exercise over a worker. Where the employer has the right
to direct the worker as to how, where, and when the work will be completed, in addition
to controlling the result of the work, the worker is a common law employee
Discretionary Bonus - Bonus paid for services performed. In order to be considered
discretionary, the bonus cannot be paid because of a promise made in advance, a
contract, or another agreement.
QUESTIONS EVALUATION WITH ANSWERS 2025/2026 GRADED A+
After-tax deduction - A deduction from an employee's pay that does not reduce the
employee's taxable wages. It is taken out only after all applicable taxes and other
deductions have been withheld (e.g., union dues, garnishments, charitable
contributions).
Escheat - In the context of payroll, the turning over of unclaimed wages to the state after
a period of time determined by state law.
Fluctuating workweek - An arrangement between an employer and a nonexempt
employee to pay the employee a fixed weekly salary even though the employee's hours
may vary from week to week.
FPC - Fundamentals of Payroll Certification
Validity Checks - Shows whether or not data entered meets the requirements set forth
by a company
Asks how independent is the employee and how much control can be exervised over
the worker. - Common Law Test
A worker cannot sign a new contract stating that they will be an indepndent contractor. -
Common Law Test
Employer has treated similar workers as independent contractors for any period and
has filed tax returns - Reasonable Basis Test
Longstanding industry standard of treating similar workers as independent contractors -
Reasonable Basis Test
Court decisions for treating workers in similar circumstances as independent contractors
- Reasonable Basis Test
IRS has ruled in a "published ruling" that the workers are indpendent contractors -
Reasonable Basis Test
Penalties for Violating IRCA - $375 for the first offence and $16,000 for the third
When must Section 1 of Form I-9 be completed? - The employee's date of hire.
When must Section 2 of Form 1-9 be completed? - Within three days of hiring the
employee.
Form SS-5 - Application for a social security card
Form I-9 - Employment Eligitability Verification
, Employee SSN verification is... - recommended but not required.
What information must an employer report for new hires? - Name, Date of Hire,
Address, SS, Employer's Name, Address, and EIN
Fair Labor Standards Act of 1938 (FLSA) - Guarantees employees a minimum wage,
requires employers to pay an overtime premium, limits when minors can work, and
provides equal pay protection.
Who is protected by FLSA? - Nonexempt employees
Minimum weekly salary required for exempt employees - $455
4 categories of exempt employees - Executives, Administrative Employee, Professional,
Outside Sales People
White Collar Employees - In the context of the Federal Wage-Hour Law, executive,
administrative, professional (including computer-related professionals), or outside sales
employees who are exempt from the law's minimum wage, overtime pay, and certain
record-keeping requirements.
Worker Classification - The process of determining whether an individual performing
services for a business is either an employee or an independent contractor
Working Condition Fringe - Benefits provided to an employee that are required for the
employee's job. These benefits are not taxable.
De minimis fringe benefit - An item provided infrequently by an employer to an
employee that is of small value. De minimis fringe benefits are never cash or cash
equivalents.
Constructive Receipt - An IRS rule that considers wages to be received by an employee
when the employee has access to the wages without substantial limitation or restriction
Batch Processing - Processing data as a group, either to increase controls or
processing efficiency
Common Law Test - A test that measures the right to control and direction that an
employer has the authority to exercise over a worker. Where the employer has the right
to direct the worker as to how, where, and when the work will be completed, in addition
to controlling the result of the work, the worker is a common law employee
Discretionary Bonus - Bonus paid for services performed. In order to be considered
discretionary, the bonus cannot be paid because of a promise made in advance, a
contract, or another agreement.
