PAYROLL COMPLIANCE LEGISLATION COURSE MIDTERM EXAM ACTUAL
QUESTIONS AND ANSWERS
1. What is the primary objective of the payroll function?
A. Maximize company profits
B. Pay employees accurately and on time while complying with legislative requirements
C. Recruit new employees
D. Prepare financial statements
Correct Answer: B. Pay employees accurately and on time while complying with legislative
requirements
Rationale:
The payroll function is responsible for accurate and timely employee compensation while
ensuring compliance throughout the payroll cycle.
2. Which statement best defines payroll?
A. The process of hiring employees
B. The process of paying employees for services performed
C. The process of preparing corporate taxes
D. The process of evaluating employee performance
Correct Answer: B. The process of paying employees for services performed
Rationale:
Payroll refers to the process through which employees are paid in exchange for the services they
provide.
3. What does legislation refer to?
A. Internal company policies
B. Laws enacted by a legislative body
C. Employee preferences
D. Accounting procedures
Correct Answer: B. Laws enacted by a legislative body
,Rationale:
Legislation consists of laws enacted by a legislative authority. Payroll professionals must
understand applicable federal and provincial/territorial legislation.
4. What does compliance mean?
A. Creating legislation
B. Observing official requirements
C. Negotiating employee salaries
D. Preparing an employee schedule
Correct Answer: B. Observing official requirements
Rationale:
Compliance means following applicable legal and other official requirements governing an
organization's activities.
5. Legislative requirements are commonly described as:
A. Optional
B. Statutory
C. Informal
D. Voluntary
Correct Answer: B. Statutory
Rationale:
Statutory requirements are requirements established by statute or law enacted by the
legislative branch of government.
6. At which two governmental levels must Canadian payroll professionals generally consider
legislation?
A. Municipal and international
B. Federal and provincial/territorial
C. Provincial and municipal only
D. Federal and municipal only
Correct Answer: B. Federal and provincial/territorial
,Rationale:
Canadian payroll compliance can involve both federal and provincial/territorial legislation,
depending on the employer and employee's circumstances.
7. Which of the following is a non-governmental payroll compliance requirement?
A. Union collective agreement
B. Criminal Code
C. Income Tax Act
D. Canada Pension Plan Act
Correct Answer: A. Union collective agreement
Rationale:
Payroll professionals may need to comply with non-governmental requirements such as
collective agreements and group insurance policies in addition to legislation.
8. Which factor can affect the responsibilities of a payroll practitioner?
A. Size of the organization
B. Employee's favourite colour
C. Office furniture
D. Company logo
Correct Answer: A. Size of the organization
Rationale:
Payroll responsibilities can vary according to organizational size, jurisdictions in which
employees are paid, reporting structure, and the presence of related departments such as HR
and Finance.
9. Which of the following may be a level within a payroll department of a large organization?
A. Payroll manager
B. Marketing artist
C. Sales customer
D. External shareholder
Correct Answer: A. Payroll manager
, Rationale:
Larger payroll departments may have roles such as payroll administrators, payroll coordinators,
and payroll managers.
10. Which organization is responsible for administering federal payroll deductions such as
income tax, CPP, and EI?
A. CRA
B. Statistics Canada
C. A municipal government
D. A private insurance company
Correct Answer: A. CRA
Rationale:
The Canada Revenue Agency administers important payroll-related programs, including income
tax, CPP, and EI responsibilities shared with other federal departments.
11. What does CPP stand for?
A. Canadian Payroll Program
B. Canada Pension Plan
C. Canadian Protection Policy
D. Canada Payment Procedure
Correct Answer: B. Canada Pension Plan
Rationale:
The Canada Pension Plan is a federal social insurance program providing benefits related to
retirement, disability, and death.
12. What is the primary purpose of CPP?
A. Provide social insurance benefits to contributors and their families
B. Provide private health insurance
C. Determine minimum wage
D. Administer employment contracts
Correct Answer: A. Provide social insurance benefits to contributors and their families
QUESTIONS AND ANSWERS
1. What is the primary objective of the payroll function?
A. Maximize company profits
B. Pay employees accurately and on time while complying with legislative requirements
C. Recruit new employees
D. Prepare financial statements
Correct Answer: B. Pay employees accurately and on time while complying with legislative
requirements
Rationale:
The payroll function is responsible for accurate and timely employee compensation while
ensuring compliance throughout the payroll cycle.
2. Which statement best defines payroll?
A. The process of hiring employees
B. The process of paying employees for services performed
C. The process of preparing corporate taxes
D. The process of evaluating employee performance
Correct Answer: B. The process of paying employees for services performed
Rationale:
Payroll refers to the process through which employees are paid in exchange for the services they
provide.
3. What does legislation refer to?
A. Internal company policies
B. Laws enacted by a legislative body
C. Employee preferences
D. Accounting procedures
Correct Answer: B. Laws enacted by a legislative body
,Rationale:
Legislation consists of laws enacted by a legislative authority. Payroll professionals must
understand applicable federal and provincial/territorial legislation.
4. What does compliance mean?
A. Creating legislation
B. Observing official requirements
C. Negotiating employee salaries
D. Preparing an employee schedule
Correct Answer: B. Observing official requirements
Rationale:
Compliance means following applicable legal and other official requirements governing an
organization's activities.
5. Legislative requirements are commonly described as:
A. Optional
B. Statutory
C. Informal
D. Voluntary
Correct Answer: B. Statutory
Rationale:
Statutory requirements are requirements established by statute or law enacted by the
legislative branch of government.
6. At which two governmental levels must Canadian payroll professionals generally consider
legislation?
A. Municipal and international
B. Federal and provincial/territorial
C. Provincial and municipal only
D. Federal and municipal only
Correct Answer: B. Federal and provincial/territorial
,Rationale:
Canadian payroll compliance can involve both federal and provincial/territorial legislation,
depending on the employer and employee's circumstances.
7. Which of the following is a non-governmental payroll compliance requirement?
A. Union collective agreement
B. Criminal Code
C. Income Tax Act
D. Canada Pension Plan Act
Correct Answer: A. Union collective agreement
Rationale:
Payroll professionals may need to comply with non-governmental requirements such as
collective agreements and group insurance policies in addition to legislation.
8. Which factor can affect the responsibilities of a payroll practitioner?
A. Size of the organization
B. Employee's favourite colour
C. Office furniture
D. Company logo
Correct Answer: A. Size of the organization
Rationale:
Payroll responsibilities can vary according to organizational size, jurisdictions in which
employees are paid, reporting structure, and the presence of related departments such as HR
and Finance.
9. Which of the following may be a level within a payroll department of a large organization?
A. Payroll manager
B. Marketing artist
C. Sales customer
D. External shareholder
Correct Answer: A. Payroll manager
, Rationale:
Larger payroll departments may have roles such as payroll administrators, payroll coordinators,
and payroll managers.
10. Which organization is responsible for administering federal payroll deductions such as
income tax, CPP, and EI?
A. CRA
B. Statistics Canada
C. A municipal government
D. A private insurance company
Correct Answer: A. CRA
Rationale:
The Canada Revenue Agency administers important payroll-related programs, including income
tax, CPP, and EI responsibilities shared with other federal departments.
11. What does CPP stand for?
A. Canadian Payroll Program
B. Canada Pension Plan
C. Canadian Protection Policy
D. Canada Payment Procedure
Correct Answer: B. Canada Pension Plan
Rationale:
The Canada Pension Plan is a federal social insurance program providing benefits related to
retirement, disability, and death.
12. What is the primary purpose of CPP?
A. Provide social insurance benefits to contributors and their families
B. Provide private health insurance
C. Determine minimum wage
D. Administer employment contracts
Correct Answer: A. Provide social insurance benefits to contributors and their families
