THE PAYROLL SOURCE CPP
PRACTICE EXAM QUESTIONS WITH
VERIFIED ANSWERS
For how many years must the employer's copy of Form 940 be retained?
A. 2
B. 3
C. 4
D. 5 - ANSWER-C. 4
Copies of the production files and most recent payroll transactions are sent nightly to
the parent company in a remote location. This practice is part of what type of plan?
A. security
B. control
C. disaster recovery
D. maintenance - ANSWER-C. disaster recovery
Employees who are not eligible for direct deposit and receive paychecks sent
through the mail are constructively paid:
A. on the check date
B. when the checks were postmarked
C. when the checks were delivered
D. when the checks were cashed - ANSWER-C. when the checks were delivered
Which of the following factors provides system security?
A. access level authorizations
B. shared passwords
C. conducting "physical payouts"
D. segregation of duties - ANSWER-A. access level authorizations
Under the FLSA, how long are employers required to keep records relating to wages,
hours, and conditions of employment?
A. 3 years
B. 4 years or until the file is no longer active
C. 7 years
D. permanently - ANSWER-A. 3 years
What is the payroll department manager responsible for in a company with strong
internal controls?
A. assuring segregation of duties in the department
B. developing company policy
C. initiating payroll transactions
D. writing the internal audit transaction test plan - ANSWER-A. assuring segregation
of duties in the department
The process of balancing multiple time sheets within a specified pay period utilizes a
procedure known as:
,A. batch totaling
B. exception reporting
C. system documentation
D. reconciliation - ANSWER-A. batch totaling
In 2017, an individual worked for three employers during the calendar year, earning
$38,000, $47,000, and $50,000 respectively. What is the total amount of social
security and Medicare taxes that should be withheld from the employee's wages by
the three employers?
A. $9,065.25
B. $9,843.90
C. $9,730.80
D. $10,327.50 - ANSWER-D $10,327.50
($38,000 + $47,000 + $50,000) x 7.65% = $10,327.50
On what form must mistakenly paid wages, for which no repayment is made, be
reported?
A. W-2
B. W-4
C. 1099-R
D. 1099-MISC - ANSWER-A W-2
The fact that transactions affect two separate accounts of a business is called:
A. compound-entry accounting
B. double-entry accounting
C. accrual accounting
D. T-accounting - ANSWER-B. double-entry accounting
A company pays all executives semimonthly. The FLSA requires all other employees
to be paid on:
A. a weekly cycle
B. a biweekly cycle
C. a semimonthly cycle
D. any established cycle - ANSWER-D. any established cycle
Calculate the employee's gross pay under the FLSA based on the following data:
Rate of pay per hour: $8.00
Production bonus: $25.00
Shift differential per hour: $0.25
Total shift hours in workweek: 44
A. $380.64
B. $377.00
C. $404.50
D. $405.64 - ANSWER-D. $405.64
(44x$8)+(44x$.25)+$25= $388
$ = $8.82
$388 + ($8.82 x .5 x 4) = 17.64
$388 + $17.64 = $405.64
Which of the following answers BEST defines the term nonexempt under the FLSA?
, A. a lower-paid class of employees
B. hourly- paid workers only
C. employees who must be paid overtime
D. a special class of employees as determined by the employer - ANSWER-C.
employees who much be paid overtime
A report has been requested that is NOT a standard report from the system. This
type of report is called a(n):
A. ad-hoc report
B. integrated report
C. batch system report
D. edit report - ANSWER-A. ad-hoc report
A procedure to have a time record signed by an employee indicates:
A. authorization for payment
B. confirmation of total hours
C. hours cannot be challenged
D. time spent at the establishement - ANSWER-B confirmation of total hours
For an employee earning $10.20 per hour and participating in a 401(k) plan with a
deferral per pay period of $50, compute the federal income taxable wages based on
the following:
Biweekly pay period
Regular 80 hours
4 hours overtime
3 hours double-time
A. $731.40
B. $888.40
C. $898.60
D. $938.40 - ANSWER-B. $888.40
(80 x $10.20) + (4 x $10.20 x 1.5) + (3 x $10.20 x 2) - $50 = $888.40
Which of the following statements is CORRECT regarding a federal tax levy?
A. It does not have to be honored if any other garnishments have been served
B. It requires a new order for each pay period
C. It is limited only by the amount of the employee's net pay
D. It is continued each pay period until a release of levy is received - ANSWER-D. It
is continued each pay period until a release of levy is received
Penalties for failure to make timely deposits are determined by:
A. a flat rate of 10% for late deposits
B. 5% of the undeposited amount with a maximum of $100,000
C. 15% of the undeposited amount with a maximum of $100,000
D. a four-tiered penalty structure based on the number of days the deposit is late -
ANSWER-D. a four-tiered penalty structure based on the number of days the deposit
is late
An employer may exclude a business reimbursement from income when the
employee's expenses meet which of the following requirements?
A. reimbursements are made with regular payroll
PRACTICE EXAM QUESTIONS WITH
VERIFIED ANSWERS
For how many years must the employer's copy of Form 940 be retained?
A. 2
B. 3
C. 4
D. 5 - ANSWER-C. 4
Copies of the production files and most recent payroll transactions are sent nightly to
the parent company in a remote location. This practice is part of what type of plan?
A. security
B. control
C. disaster recovery
D. maintenance - ANSWER-C. disaster recovery
Employees who are not eligible for direct deposit and receive paychecks sent
through the mail are constructively paid:
A. on the check date
B. when the checks were postmarked
C. when the checks were delivered
D. when the checks were cashed - ANSWER-C. when the checks were delivered
Which of the following factors provides system security?
A. access level authorizations
B. shared passwords
C. conducting "physical payouts"
D. segregation of duties - ANSWER-A. access level authorizations
Under the FLSA, how long are employers required to keep records relating to wages,
hours, and conditions of employment?
A. 3 years
B. 4 years or until the file is no longer active
C. 7 years
D. permanently - ANSWER-A. 3 years
What is the payroll department manager responsible for in a company with strong
internal controls?
A. assuring segregation of duties in the department
B. developing company policy
C. initiating payroll transactions
D. writing the internal audit transaction test plan - ANSWER-A. assuring segregation
of duties in the department
The process of balancing multiple time sheets within a specified pay period utilizes a
procedure known as:
,A. batch totaling
B. exception reporting
C. system documentation
D. reconciliation - ANSWER-A. batch totaling
In 2017, an individual worked for three employers during the calendar year, earning
$38,000, $47,000, and $50,000 respectively. What is the total amount of social
security and Medicare taxes that should be withheld from the employee's wages by
the three employers?
A. $9,065.25
B. $9,843.90
C. $9,730.80
D. $10,327.50 - ANSWER-D $10,327.50
($38,000 + $47,000 + $50,000) x 7.65% = $10,327.50
On what form must mistakenly paid wages, for which no repayment is made, be
reported?
A. W-2
B. W-4
C. 1099-R
D. 1099-MISC - ANSWER-A W-2
The fact that transactions affect two separate accounts of a business is called:
A. compound-entry accounting
B. double-entry accounting
C. accrual accounting
D. T-accounting - ANSWER-B. double-entry accounting
A company pays all executives semimonthly. The FLSA requires all other employees
to be paid on:
A. a weekly cycle
B. a biweekly cycle
C. a semimonthly cycle
D. any established cycle - ANSWER-D. any established cycle
Calculate the employee's gross pay under the FLSA based on the following data:
Rate of pay per hour: $8.00
Production bonus: $25.00
Shift differential per hour: $0.25
Total shift hours in workweek: 44
A. $380.64
B. $377.00
C. $404.50
D. $405.64 - ANSWER-D. $405.64
(44x$8)+(44x$.25)+$25= $388
$ = $8.82
$388 + ($8.82 x .5 x 4) = 17.64
$388 + $17.64 = $405.64
Which of the following answers BEST defines the term nonexempt under the FLSA?
, A. a lower-paid class of employees
B. hourly- paid workers only
C. employees who must be paid overtime
D. a special class of employees as determined by the employer - ANSWER-C.
employees who much be paid overtime
A report has been requested that is NOT a standard report from the system. This
type of report is called a(n):
A. ad-hoc report
B. integrated report
C. batch system report
D. edit report - ANSWER-A. ad-hoc report
A procedure to have a time record signed by an employee indicates:
A. authorization for payment
B. confirmation of total hours
C. hours cannot be challenged
D. time spent at the establishement - ANSWER-B confirmation of total hours
For an employee earning $10.20 per hour and participating in a 401(k) plan with a
deferral per pay period of $50, compute the federal income taxable wages based on
the following:
Biweekly pay period
Regular 80 hours
4 hours overtime
3 hours double-time
A. $731.40
B. $888.40
C. $898.60
D. $938.40 - ANSWER-B. $888.40
(80 x $10.20) + (4 x $10.20 x 1.5) + (3 x $10.20 x 2) - $50 = $888.40
Which of the following statements is CORRECT regarding a federal tax levy?
A. It does not have to be honored if any other garnishments have been served
B. It requires a new order for each pay period
C. It is limited only by the amount of the employee's net pay
D. It is continued each pay period until a release of levy is received - ANSWER-D. It
is continued each pay period until a release of levy is received
Penalties for failure to make timely deposits are determined by:
A. a flat rate of 10% for late deposits
B. 5% of the undeposited amount with a maximum of $100,000
C. 15% of the undeposited amount with a maximum of $100,000
D. a four-tiered penalty structure based on the number of days the deposit is late -
ANSWER-D. a four-tiered penalty structure based on the number of days the deposit
is late
An employer may exclude a business reimbursement from income when the
employee's expenses meet which of the following requirements?
A. reimbursements are made with regular payroll
