Test Bank For An Introduction to Payroll Administration 3Rd Canadian Edition By Alan Dryden

File: Chapter 03 Test Bank True/False [QUESTION] 1. The pay cycle is determined by the Canada Revenue Agency and cannot be altered by the employer. Ans: False Learning Objective: 03-01 Topic: 03-02 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 2. The employment contract may express payment in any method imagined (for example: per hour, per year, per unit, per dollar sold, per telephone call, per page written, etc.). Ans: True Learning Objective: 03-01 Topic: 03-02 Difficulty: Easy Accessibility: Keyboard Navigation [QUESTION] 3. Employees who earn a salary can be asked to work more than 44 hours in a week without being entitled to overtime pay. Ans: False Learning Objective: 03-01 Topic: 03-04 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 4. To qualify as a taxable benefit the employee must receive something that is of a personal benefit to them. Ans: True Learning Objective: 03-02 Topic: 03-06 Difficulty: Easy Accessibility: Keyboard Navigation [QUESTION] 5. Mary has a job as waitress at a small restaurant. Tips are pooled in a jar and distributed back to employees at the end of each shift by the manager. These tips are not considered taxable income because they are funded by the patrons rather than the owner of the business. Ans: False Learning Objective: 03-02 Topic: 03-08 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 6. Rachel works at Taco Bell and receives a free meal at the end of each shift. This meal must be included in her pay calculation as a taxable benefit. Ans: True Learning Objective: 03-02 Topic: 03-08 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 7. Amblake Co. offers a $500 prize to employees who have completed a voluntary survey to help them gather information about employee engagement. This bonus does not have to be taxed. Ans: False Learning Objective: 03-02 Topic: 03-08 Difficulty: Moderate Accessibility: Keyboard Navigation Multiple Choice [QUESTION] 8. If an employee earns a salary of $58,500 per year, their weekly pay cycle salary would be: A. $4,875.00 B. $2,437.50 C. $2,250.00 D. $1,125.00 E. $562.50 Ans: D Learning Objective: 03-01 Topic: 03-02 Topic: 03-04 Difficulty: Easy Accessibility: Keyboard Navigation [QUESTION] 9. If an employee earns a salary of $58,500 per year, their semi-monthly pay cycle salary would be: A. $4,875.00 B. $2,437.50 C. $2,250.00 D. $1,125.00 E. $562.50 Ans: B Learning Objective: 03-01 Topic: 03-02 Topic: 03-04 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 10. If Mary earns $260,000 per year how much does she earn per week? A. $10,000 B. $5,000 C. $260,000 D. $2,500 E. $6,000 Ans: B Learning Objective: 03-01 Topic: 03-04 Difficulty: Easy Accessibility: Keyboard Navigation [QUESTION] 11. If Sue earns $55 per hour and works 15 hours, what is her gross pay for the period? A. $825 B. $750 C. $55 D. $15 E. $1,235.70 Ans: A Learning Objective: 03-01 Topic: 03-03 Difficulty: Easy Accessibility: Keyboard Navigation [QUESTION] 12. An example of a taxable benefit would be: A. Tuition paid for a WordPress course required for work. B. Use of a company car while working. C. An ergonomic chair provided for the employee to use at the office. D. A paid gym membership. E. Airline tickets to travel to an office event. Ans: D Learning Objective: 03-02, 03-03 Topic: 03-06 Topic: 03-14 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 13. Reimbursement of costs covered by employees on behalf of the employer such as travel expenses and meal allowances: A. Are reported as part of gross wages. B. Increase the employee's taxable income. C. Typically are paid through Accounts Payable and do not impact deductions. D. Must be reported on a T4 to the Canada Revenue Agency. E. Must be below $300 per person per calendar year. Ans: C Learning Objective: 03-02 Topic: 03-05 Topic: 03-12 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 14. The following is not an example of a taxable allowance: A. Cash paid to an employee to purchase normal clothing to wear on the job. B. Cash paid to cover living expenses. C. Cash paid to cover the cost of personal vehicle which may be used for company business. D. Cash paid to cover travel expenses such as hotels, airfare, taxis, meals, etc. E. Cash paid to cover entertainment costs not for the benefit of the company. Ans: D,E Learning Objective: 03-02 Topic: 03-05 Difficulty: Easy Accessibility: Keyboard Navigation [QUESTION] 15. Cell phone service paid for by the employer for the employee's personal use is: A. Not taxable B. Taxable with CPP and EI deductions C. Taxable with CPP deductions but not EI D. Taxable with EI deductions but not CPP E. Not taxable but subject to CPP deductions Ans: C Learning Objective: 03-02, 03-03 Topic: 03-06 Topic: 03-14 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 16. Use of a company gym on site (recreational facility) is: A. Not taxable B. Taxable with CPP and EI deductions C. Taxable with CPP deductions but not EI D. Taxable with EI deductions but not CPP E. Not taxable but subject to CPP deductions Ans: C Learning Objective: 03-02, 03-03 Topic: 03-06 Topic: 03-14 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 17. Payments for guests travelling with an employee, in cash are: A. Not taxable B. Taxable with CPP and EI deductions C. Taxable with CPP deductions but not EI D. Taxable with EI deductions but not CPP E. Not taxable but subject to CPP deductions Ans: B Learning Objective: 03-02, 03-03 Topic: 03-06 Topic: 03-14 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 18. Cash reimbursement for money spent to pay for office supplies such as postage stamps are: A. Not taxable B. Taxable with CPP and EI deductions C. Taxable with CPP deductions but not EI D. Taxable with EI deductions but not CPP E. Not taxable but subject to CPP deductions Ans: A Learning Objective: 03-02, 03-03 Topic: 03-06 Topic: 03-14 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 19. This information is not required in order to calculate the automobile taxable benefit for employees who are permitted to use company owned cars for personal use. A. The total number of kilometres driven. B. The total amount of business kilometres driven. C. The purchase price of the automobile. D. The cost of gas for personal driving. E. The amount of money reimbursed to the employer by the employee for personal use. Ans: D Learning Objective: 03-02 Topic: 03-07 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 20. The CEO of Amblake Co. would like to offer free parking to all employees in a prime downtown space. What impact will this have on their pay? A. No impact. B. Will increase their rate of pay per hour. C. Will reduce their net income by the full value of the parking space. D. Will result in lower statutory deductions. E. Will result in higher statutory deductions. Ans: E Learning Objective: 03-02 Topic: 03-06 Difficulty: Difficult Accessibility: Keyboard Navigation Short Answer [QUESTION] 21. Fred Vedaro is paid bi-weekly and earns $15 per hour with overtime paid after 44 hours in one week. Fred works 48 hours in the first week and 39 in the second. Vacation pay at 4% will be paid on each pay cycle. Calculate Fred's gross wages for this two week period. Ans: Type of Wage Regular Calculation Week 1 - 44 hours Week 2 - 39 hours Total 83 hours at $15/ hour Amount $1,245.00 Overtime Vacation Pay Week 1 - 4 hours Week 2 - 0 hours Total 4 hours at $15/ hour x 1.5 4% of ($1245.00 + $90.00= $1,335.00) $90.00 $53.40 Total Wages $1,388.40 Learning Objective: 03-01 Topic: 03-03 Difficulty: Moderate [QUESTION] 22. Martha Jovia is paid weekly and earns $25 per hour with overtime paid after 44 hours in one week or 8 hours in one day. Martha worked 4 hours on Sunday, 8 hours on Monday, 10 on Tuesday, 7 on Wednesday and nothing for the remainder of the week. Vacation pay at 6% will be paid on each pay cycle. She also earns a shift premium of 5% for each hour worked on a weekend. Calculate Martha's gross wages for this one week period. Ans: Type of Wage Calculation Amount Regular Sunday - 4 hours Monday - 8 hours Tuesday - 8 hours Wednesday - 7 hours Total 27 hours at $25/ hour $675.00 Overtime Shift Premium Tuesday - 2 hours Total 2 hours at $25/ hour x 1.5 Sunday - 5 hours Total 5 hours at 5% x $25/ hour $75.00 $6.25 Vacation Pay Total Wages 6% of ($675.00 + $75.00 + $6.25) $45.38 $801.63 Learning Objective: 03-01 Topic: 03-03 Difficulty: Moderate [QUESTION] 23. List 3 examples of taxable benefits. Ans: Solutions could include: Personal use of an employer vehicle. Premiums paid by the employer for life insurance. Parking fees paid by the employer when a vehicle is not required for the job. Interest-free loans. RRSP contributions by the employer. Learning Objective: 03-02 Topic: 03-06 Difficulty: Easy [QUESTION] 24. What information is required to utilize the Canada Revenue Agency online calculator of the automobile taxable benefit? Ans: The original cost of the vehicle The number of months access is provided in the year. The total number of kilometres driven. The total number of kilometres driven for business purposes. The amount of money reimbursed by the employee to the employer for personal use. Learning Objective: 03-02 Topic: 03-07 Difficulty: Easy [QUESTION] 25. Frank Hill works for a company with a semi-monthly pay cycle. He earns $80,000 per year and receives over-time paid at time and a half for any approved hours worked in excess of 40 hours per week. He receives a parking allowance of $100 per month and is paid $25 per hour for working on-call on weekends. During this pay cycle Frank worked 9 hours of approved over-time this pay cycle and was on-call for 10 hours on Saturday. Calculate Frank's gross earnings for this pay cycle. Ans: Type of Wage Calculation Amount Regular $80,000 ÷ 24 pay periods $3,333.33 Overtime $80,000 ÷ (40*52) = $38.46 regular rate/hour 9x$38.46x1.5 $519.21 Parking Allowance $100x12÷24 $50.00 On Call Pay $25/hour x 10 hours $250.00 Gross Earnings $4,152.54 Learning Objective: 03-01, 03-02, 03-03 Topic: 03-04 Topic: 03-06 Topic: 03-14 Difficulty: Difficult [QUESTION] 26. Sophie Gowna works for a company with a bi-weekly pay cycle. She earns $30 per hour and receives over-time paid at time and a half for any hours worked over 37.5 in one week. Sophie receives a cash company car allowance of $300 per month and is paid 8% vacation pay on hours worked. She also is receiving a $973.45 cash reimbursement of travel expenses incurred for the company last month. During this pay cycle Sophie worked 40 hours in the first week and 35 hours in the second. Calculate Sophie's gross earnings for this pay cycle. Ans: Type of Wage Calculation Amount Regular 37.5 hours in Week 1 and 35 $2,175.00 hours in Week 2 at $30/hour Overtime (40-37.5) = 2.5 hours in Week 1 $30x1.5=$45x2.5hours $112.50 Car Allowance $300x12÷26 $138.46 Vacation Pay 8% of ($2,175.00 + 112.50 = $2,287.50) $183.00 Expense Reimbursement Not paid through payroll $0.00 Gross Earnings $2,608.96 Learning Objective: 03-01, 03-02, 03-03 Topic: 03-04 Topic: 03-06 Topic: 03-14 Difficulty: Difficult File: Chapter 05 Test Bank True/False [QUESTION] 1. Employees do not need to be notified when court order with-holdings are requested since they should be aware of the situation already. Ans: False Learning Objective: 05-01 Topic: 05-01 Difficulty: Easy Accessibility: Keyboard Navigation [QUESTION] 2. Employers should maintain documentation showing that employees have accepted any required non- statutory deductions. Ans: True Learning Objective: 05-01 Topic: 05-01 Difficulty: Easy Accessibility: Keyboard Navigation [QUESTION] 3. Finding out that an employee has an outstanding court order related to unpaid debts can be upsetting to the employer and is grounds for termination of employment. Ans: False Learning Objective: 05-01 Topic: 05-02 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 4. If a sales clerk is short on their till at the end of the night, the employer can deduct the amount of the shortage off their next pay. Ans: False Learning Objective: 05-02 Topic: 05-03 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 5. If a gas attendant is on duty at the time when a customer leaves without paying, the employer can deduct the amount of the lost payment off their next pay. Ans: False Learning Objective: 05-02 Topic: 05-03 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 6. If group insurance premiums are partially paid by the employee and the employee has acknowledged this deduction in writing, the employer can deduct the cost directly from each pay. Ans: True Learning Objective: 05-02 Topic: 05-03 Difficulty: Easy Accessibility: Keyboard Navigation [QUESTION] 7. Defined contribution benefit plans are valued by employees because the payment at the retirement is known in advance. Ans: False Learning Objective: 05-02 Topic: 05-03 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 8. Employees bear the risk of market fluctuation when they have defined benefit pension plans. Ans: False Learning Objective: 05-02 Topic: 05-03 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 9. Employees bear the risk of market fluctuation when they have defined contribution pension plans. Ans: True Learning Objective: 05-02 Topic: 05-03 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 10. Employer optional deductions such as social club memberships should be deducted first, before statutory deductions are made in case the employee runs out of money to cover off the extras. Ans: False Learning Objective: 05-03 Topic: 05-05 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 11. Until the money is due, deductions taken off employee payments can be used to cover operating expenses for the business. Ans: False Learning Objective: 05-03 Topic: 05-05 Difficulty: Easy Accessibility: Keyboard Navigation Multiple Choice [QUESTION] 12. If gross earnings less statutory deductions for an employee in Ontario with a family support Garnishment Order equal $1500, what is the maximum amount that can be deducted for the Order? A. $1500 B. $1250 C. $750 D. $300 E. $0 Ans: C Learning Objective: 05-01 Topic: 05-02 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 13. If gross earnings less statutory deductions for an employee in Ontario with a non-family support Garnishment Order equal $1500, what is the maximum amount that can be deducted for the Order? A. $1500 B. $1250 C. $750 D. $300 E. $0 Ans: D Learning Objective: 05-01 Topic: 05-02 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 14. What is the maximum amount, by percentage, that a family support order may direct the employer to with-hold? A. 10% B. 20% C. 30% D. 40% E. 50% Ans: E Learning Objective: 05-03 Topic: 05-02 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 15. An employee with an outstanding family support Garnishment Order asks you to allow him to make his RRSP contributions before the available garnishment amount is calculated. You must: A. Agree and do as asked as it is his pay B. Calculate the amount after all statutory deductions are applied C. Calculate the amount after all deductions are applied including voluntary D. Terminate the employee immediately for trying to skip out on his family responsibilities E. Contact his supervisor immediately and inform him about the terms of the Garnishment Order Ans: B Learning Objective: 05-03 Topic: 05-05 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 16. The following is not an example of a statutory deduction. A. Federal Taxes B. Provincial Taxes C. Canada Pension Plan Contributions D. Employment Insurance Premiums E. Union Dues Ans: E Learning Objective: 05-01 Topic: 05-01 Difficulty: Easy Accessibility: Keyboard Navigation [QUESTION] 17. If an employee disagrees with the terms outlined in a Garnishment Order the payroll administrator should: A. Cease all deductions until the issue is resolved B. Contact the court to discuss the employee objection C. Continue to follow the terms of the order until advise by the court otherwise D. Deduct additional amounts in case the employee decides to quit over the disagreement E. Follow directions provided by the employee regarding how they would like the matter handled Ans: C Learning Objective: 05-01 Topic: 05-02 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 18. A Garnishment Order may not be issued by: A. Canada Revenue Agency B. A Credit Union (where the member has signed an Assignment of Wages) C. Creditors (where the member has signed an Assignment of Wages) D. The Federal Court of Canada E. Small Claims Court Ans: C Learning Objective: 05-01 Topic: 05-02 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 19. The following statement is not true regarding employer sponsored Registered Retirement Savings Plans. A. The final retirement benefit is known in advance. B. Allow employers to reduce taxes from source deductions. C. Fees are usually lower than for individuals. D. Contributions may be made by the employer, the employee or both depending on the structure of the plan. E. Employee access is often limited to the principal or interest income prior to retirement. Ans: A Learning Objective: 05-02 Topic: 05-03 Difficulty: Easy Accessibility: Keyboard Navigation [QUESTION] 20. An employee has a family support order demanding $500 per weekly pay be with-held. If the employee has a gross taxable income of $1000, can the full amount be deducted on this pay? A. Yes B. No C. Maybe, if the employee does not have any voluntary deductions D. Maybe, if the employee has many tax credits E. There isn't enough information to say for sure Ans: B Learning Objective: 05-01, 05-03 Topic: 05-02 Topic: 05-05 Difficulty: Difficult Accessibility: Keyboard Navigation Short Answer [QUESTION] 21. Name the 3 Statutory Deductions in Canada. Ans: 1. Canada/Quebec Pension Plan Contributions 2. Employment Insurance Premiums 3. Income Taxes Learning Objective: 05-01 Topic: 05-01 Difficulty: Easy [QUESTION] 22. What steps are recommended when a Garnishment Order is received by the employer? Ans: Contact the court immediately if the employee is unknown or no longer works for you. Provide the employee with a copy of the Order in a confidential manner. If the employee objects to the with-holding, advise them to contact the court and let them know that you have no option but to follow the Order. Carefully review the terms of the Order and speak to the court if in doubt on how to comply. Follow the instructions explicitly. Begin deductions with the next pay cycle. Notify the court immediately if an interruption of earnings occurs. Learning Objective: 05-01 Topic: 05-02 Difficulty: Easy [QUESTION] 23. What should be acknowledged in the employee written permission for employer optional deductions? Ans: Name and address of payee Purpose of payment Amount of payment, including frequency and total amount if appropriate The date of signing as well as any termination date for the deductions Learning Objective: 05-03 Topic: 05-04 Difficulty: Easy [QUESTION] 24. List 3 examples of employer optional deductions that may be authorized by the employer for the employee's benefit. Ans: Solution can include any combination of the following (or others): Canada Savings Bonds Provincial Savings Bonds Parking Fees Employer sponsored social funds Charities such as United Way and the Red Cross Gym membership payments Learning Objective: 05-03 Topic: 05-04 Difficulty: Easy [QUESTION] 25. List the order of priority of deductions for an employee. Ans: Statutory deductions (CPP, EI and Taxes) Garnishment Orders and other legally binding orders Employee compulsory Employee voluntary deductions Learning Objective: 05-03 Topic: 05-05 Difficulty: Moderate