FPC Payroll Fundamentals Complete Exam
Study Questions with Verified Answers
Already Graded A+
1. Asks how independent is the employee and how much control can be
exercised over the worker. - ANSWER Common Law Test
2. A worker cannot sign a new contract stating that they will be an independent
contractor. - ANSWER Common Law Test
3. Employer has treated similar workers as independent contractors for any
period and has filed tax returns - ANSWER Reasonable Basis Test
4. Electronic funds transfer (EFT) - ANSWER The electronic movement of
funds from one bank account to another. Direct deposit of employees'
paychecks is an example of EFT.
5. Exempt employees - ANSWER Generally, employees who are exempt from
the minimum wage and overtime provisions of the Fair Labor Standards Act
6. FICA - ANSWER The Federal Insurance Contributions Act which imposes
employer and employee taxes to fund the federal government's old-age,
survivors, and disability insurance (OASDI/Social Security) and health
insurance (HI/Medicare) trust funds.
7. Gross-up - ANSWER The formula for determining the total taxable gross
when the employer pays the employee's share of tax
,8. Noncash fringe benefits - ANSWER Benefits paid to employees in a form
other than cash (e.g., health insurance, company-provided vehicles, group-
term life insurance)
9. Percentage method of withholding- - ANSWER A procedure for calculating
the amount of income tax to withhold from wages using mathematical
formulas rather than simple tables
10.Premium pay - ANSWER The portion of pay, over and above the regular
hourly rate, paid for overtime hours worked.
11.Pretax deduction - ANSWER A deduction from pay that reduces taxable
wages
12.W-2 - ANSWER Wage and Tax Statement
13.W-4S - ANSWER Request for Federal Income Tax Withholding From Sick
Pay
14.668-W - ANSWER Notice of Levy on Wages, Salary, and Other Income
15.941 - ANSWER Employer's Quarterly Federal Tax Return
16.Wage - ANSWER The amount paid to an employee for every hour worked
17.Salary - ANSWER A fixed annual(yearly) sum of money divided among
equal pay periods
,18.Biweekly - ANSWER employees are paid every two weeks. 26 times a year
19.Accounting Period - ANSWER the period of time covered in an income
statement
20.Aggregate method - ANSWER method of withholding federal income tax
from supplemental wages in which the supplemental payment is combined
with the regular wages paid during the most recent payroll period.
21.Longstanding industry standard of treating similar workers as independent
contractors - ANSWER Reasonable Basis Test
22.Court decisions for treating workers in similar circumstances as independent
contractors - ANSWER Reasonable Basis Test
23.IRS has ruled in a "published ruling" that the workers are indpendent
contractors - ANSWER Reasonable Basis Test
24.Penalties for Violating IRCA - ANSWER $375 for the first offence and
$16,000 for the third
25.When must Section 1 of Form I-9 be completed? - ANSWER The
employee's date of hire.
26.When must Section 2 of Form 1-9 be completed? - ANSWER Within three
days of hiring the employee.
27.Form SS-5 - ANSWER Application for a social security card
, 28.Form I-9 - ANSWER Employment Eligitability Verification
29.Employee SSN verification is... - ANSWER recommended but not required.
30.What information must an employer report for new hires? - ANSWER
Name, Date of Hire, Address, SS, Employer's Name, Address, and EIN
31.Fair Labor Standards Act of 1938 (FLSA) - ANSWER Guarantees
employees a minimum wage, requires employers to pay an overtime
premium, limits when minors can work, and provides equal pay protection.
32.Who is protected by FLSA? - ANSWER Nonexempt employees
33.Minimum weekly salary required for exempt employees - ANSWER $455
34.4 categories of exempt employees - ANSWER Executives, Administrative
Employee, Professional, Outside Sales People
35.Special FLSA provisions exist for... - ANSWER Various transportation
workers, agricultural workers, hospital employees, and public sector
employees.
36.Automated clearing house (ACH)- - ANSWER An entity which serves as
the central agency for processing and transferring funds from one financial
institution to another via electronic data transmission. ACHs operate under
rules and standards established by the National Automated Clearing House
Association (NACHA)
Study Questions with Verified Answers
Already Graded A+
1. Asks how independent is the employee and how much control can be
exercised over the worker. - ANSWER Common Law Test
2. A worker cannot sign a new contract stating that they will be an independent
contractor. - ANSWER Common Law Test
3. Employer has treated similar workers as independent contractors for any
period and has filed tax returns - ANSWER Reasonable Basis Test
4. Electronic funds transfer (EFT) - ANSWER The electronic movement of
funds from one bank account to another. Direct deposit of employees'
paychecks is an example of EFT.
5. Exempt employees - ANSWER Generally, employees who are exempt from
the minimum wage and overtime provisions of the Fair Labor Standards Act
6. FICA - ANSWER The Federal Insurance Contributions Act which imposes
employer and employee taxes to fund the federal government's old-age,
survivors, and disability insurance (OASDI/Social Security) and health
insurance (HI/Medicare) trust funds.
7. Gross-up - ANSWER The formula for determining the total taxable gross
when the employer pays the employee's share of tax
,8. Noncash fringe benefits - ANSWER Benefits paid to employees in a form
other than cash (e.g., health insurance, company-provided vehicles, group-
term life insurance)
9. Percentage method of withholding- - ANSWER A procedure for calculating
the amount of income tax to withhold from wages using mathematical
formulas rather than simple tables
10.Premium pay - ANSWER The portion of pay, over and above the regular
hourly rate, paid for overtime hours worked.
11.Pretax deduction - ANSWER A deduction from pay that reduces taxable
wages
12.W-2 - ANSWER Wage and Tax Statement
13.W-4S - ANSWER Request for Federal Income Tax Withholding From Sick
Pay
14.668-W - ANSWER Notice of Levy on Wages, Salary, and Other Income
15.941 - ANSWER Employer's Quarterly Federal Tax Return
16.Wage - ANSWER The amount paid to an employee for every hour worked
17.Salary - ANSWER A fixed annual(yearly) sum of money divided among
equal pay periods
,18.Biweekly - ANSWER employees are paid every two weeks. 26 times a year
19.Accounting Period - ANSWER the period of time covered in an income
statement
20.Aggregate method - ANSWER method of withholding federal income tax
from supplemental wages in which the supplemental payment is combined
with the regular wages paid during the most recent payroll period.
21.Longstanding industry standard of treating similar workers as independent
contractors - ANSWER Reasonable Basis Test
22.Court decisions for treating workers in similar circumstances as independent
contractors - ANSWER Reasonable Basis Test
23.IRS has ruled in a "published ruling" that the workers are indpendent
contractors - ANSWER Reasonable Basis Test
24.Penalties for Violating IRCA - ANSWER $375 for the first offence and
$16,000 for the third
25.When must Section 1 of Form I-9 be completed? - ANSWER The
employee's date of hire.
26.When must Section 2 of Form 1-9 be completed? - ANSWER Within three
days of hiring the employee.
27.Form SS-5 - ANSWER Application for a social security card
, 28.Form I-9 - ANSWER Employment Eligitability Verification
29.Employee SSN verification is... - ANSWER recommended but not required.
30.What information must an employer report for new hires? - ANSWER
Name, Date of Hire, Address, SS, Employer's Name, Address, and EIN
31.Fair Labor Standards Act of 1938 (FLSA) - ANSWER Guarantees
employees a minimum wage, requires employers to pay an overtime
premium, limits when minors can work, and provides equal pay protection.
32.Who is protected by FLSA? - ANSWER Nonexempt employees
33.Minimum weekly salary required for exempt employees - ANSWER $455
34.4 categories of exempt employees - ANSWER Executives, Administrative
Employee, Professional, Outside Sales People
35.Special FLSA provisions exist for... - ANSWER Various transportation
workers, agricultural workers, hospital employees, and public sector
employees.
36.Automated clearing house (ACH)- - ANSWER An entity which serves as
the central agency for processing and transferring funds from one financial
institution to another via electronic data transmission. ACHs operate under
rules and standards established by the National Automated Clearing House
Association (NACHA)
