FPC EXAM PREP 2026-2027 TEST QUESTIONS WITH ACCURATE & DETAILED
SOLUTIONS
Define payroll.
Process of calculating and distributing wages to employees.
What document is used to report annual wages to employees?
Form W-2.
Main federal law establishing minimum wage?
Fair Labor Standards Act (FLSA).
Purpose of Form W-4
Employee's federal income tax withholding authorization.
Who issues Circular E (Publication 15)?
Internal Revenue Service (IRS).
Define taxable wages.
All compensation subject to federal employment taxes.
,What is gross pay?
Total earnings before deductions.
Effect of pre-tax deductions on taxable income
Reduce taxable income before taxes are applied.
What is net pay?
Amount remaining after all deductions.
Define exempt employee
Worker not entitled to overtime under FLSA.
Primary law governing child labor
Fair Labor Standards Act (FLSA).
Purpose of the Federal Insurance Contributions Act
Fund Social Security and Medicare.
How often must FICA taxes be remitted?
,Semiweekly or monthly based on deposit schedule.
Who pays FUTA tax?
Employer only.
What is the FUTA wage base?
$7000 per employee per year.
Define "constructive receipt" of wages
When funds are made available to the employee.
Purpose of the Federal Unemployment Tax Act
Provide unemployment compensation funding.
The FLSA sets federal ___ and overtime pay.
minimum wage
What is the IRS definition of an employee?
Someone subject to employers control regarding what and how work is done.
, What is a Form 940?
Annual federal unemployment tax return.
Purpose of Form 941
Quarterly federal payroll tax return.
What government agency enforces wage and hour laws?
Department of Labor (DOL).
Define "regular rate of pay."
Hourly rate including most compensation for overtime calculation.
What is overtime pay rate under FLSA?
1.5 times the regular rate.
Name one type of exempt employee.
Executive administrative or professional.
What act regulates payroll record retention?
SOLUTIONS
Define payroll.
Process of calculating and distributing wages to employees.
What document is used to report annual wages to employees?
Form W-2.
Main federal law establishing minimum wage?
Fair Labor Standards Act (FLSA).
Purpose of Form W-4
Employee's federal income tax withholding authorization.
Who issues Circular E (Publication 15)?
Internal Revenue Service (IRS).
Define taxable wages.
All compensation subject to federal employment taxes.
,What is gross pay?
Total earnings before deductions.
Effect of pre-tax deductions on taxable income
Reduce taxable income before taxes are applied.
What is net pay?
Amount remaining after all deductions.
Define exempt employee
Worker not entitled to overtime under FLSA.
Primary law governing child labor
Fair Labor Standards Act (FLSA).
Purpose of the Federal Insurance Contributions Act
Fund Social Security and Medicare.
How often must FICA taxes be remitted?
,Semiweekly or monthly based on deposit schedule.
Who pays FUTA tax?
Employer only.
What is the FUTA wage base?
$7000 per employee per year.
Define "constructive receipt" of wages
When funds are made available to the employee.
Purpose of the Federal Unemployment Tax Act
Provide unemployment compensation funding.
The FLSA sets federal ___ and overtime pay.
minimum wage
What is the IRS definition of an employee?
Someone subject to employers control regarding what and how work is done.
, What is a Form 940?
Annual federal unemployment tax return.
Purpose of Form 941
Quarterly federal payroll tax return.
What government agency enforces wage and hour laws?
Department of Labor (DOL).
Define "regular rate of pay."
Hourly rate including most compensation for overtime calculation.
What is overtime pay rate under FLSA?
1.5 times the regular rate.
Name one type of exempt employee.
Executive administrative or professional.
What act regulates payroll record retention?
