FPC Practice questions with Correct
Answers
cafeteria plan are authorized by what Internal Revenue Code Section?
A. 125
B. 401k
C. 403b
D. 457b - Correct Answer✔️✔️-a. 125
all of the following are tax implications of a cafeteria plan except:
a. no income tax withholding
b. no social security and medicare tax withholding
c. must withhold income, social security, and medicare taxes
d. no form W2 reporting - Correct Answer✔️✔️-C. must withhold income, social security, and
medicare taxes
One of the options in an employee's cafeteria benefit plan is a dependent care flexible spending
account. He earmarked $100 per month to the account to pay for child care but spend only $1000
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,by the end of the plans grace period. at the end of the grace period, what happens to the $200 left in
the account?
a. the amount is forfeited
b. it will be added to his taxable income
c. he can use it to "buy" ab additional benefit
d. it ill carry over to the next year - Correct Answer✔️✔️-A. the amount is forfeited
Prior to beginning work for a company, a chemical engineer signed a contract stating that she agreed
to work as an independent contractor. she performs all her duties in the companys laboratories,
works under the companys direction, and maintains regular office hours. what is her status?
a. independent contractor under common law
b. independent contractor under reasonable basis test
c. employee - Correct Answer✔️✔️-C. employee
do not assume that the employer has fulfilled its responsibilities and is free from penalty simply by
having a worker sign a contract stating he is a 1099. individuals do not have a right to waive their ee
status in a contract.
A retired safety inspector for the company was rehired as a consultant when the company expanded
its plant operations. the retired employee was a natural choice. the tasks he undertook as a
consultant were the same as the ones he performed before retirement. paid monthly, he has agreed
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,to work under the direction of his old boss until the new plant facilitates are fully operational? What
is his status?
a. independent contractor under common law
b. independent contractor under reasonable basis test
c. employee - Correct Answer✔️✔️-C. employee
consultants are generally treated as independent contractors. however, when an ex ee is performing
the same or similar job as before retirement, it is unlikely that he qualified as a 1099 after
termination
a receptionist has agreed to work afternoons at the company until the company can find a full time
replacement. what is the receptionists status?
a. independent contractor under common law
b. independent contractor under reasonable basis
c. employee - Correct Answer✔️✔️-C. employee
whether or not an ee is full time or part time or works a few weeks or a lifetime for the company is
not relevant her. she is an employee.
All of the following types of employees are classified as exempt from the FLSAs min wage and OT
requirements except:
a. professional
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, b. outside salesperson
c. administrative
d. computer repairman - Correct Answer✔️✔️-D. computer repairman
a computer repairman does not perform the duties required to qualify as an exempt computer
professional
a waitress is paid $2.25 per hour and she receives $225 in tips during the week. She works 4o hours
per week. Which of the following is true?
a. her employer is allowed to reduce her cash wage to no less than $2.13 per hour
b. her base pay must be increase to $4.5 per hour after a 90 day training period.
c. she must be paid $5.12 per hour by her employer
d. her base salary must be raised to $3 per hour to comply with fed min wage requirements. -
Correct Answer✔️✔️-A. her employer is allowed to reduce her cash wage to no less than $2.13 per
hour
her employer can claim the full federal tip credit because she receives tips and with her tips, is paid
more than the current federal minimum wage purposes, her employer must pay her at least $2.13 per
hour and her hourly rate plus tips must equal at least the current federal min wage
if a state sets the minimum wage at a rate greater than the federal minimum wage, the state
minimum wage must be paid to workers in that state
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Answers
cafeteria plan are authorized by what Internal Revenue Code Section?
A. 125
B. 401k
C. 403b
D. 457b - Correct Answer✔️✔️-a. 125
all of the following are tax implications of a cafeteria plan except:
a. no income tax withholding
b. no social security and medicare tax withholding
c. must withhold income, social security, and medicare taxes
d. no form W2 reporting - Correct Answer✔️✔️-C. must withhold income, social security, and
medicare taxes
One of the options in an employee's cafeteria benefit plan is a dependent care flexible spending
account. He earmarked $100 per month to the account to pay for child care but spend only $1000
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 1
,by the end of the plans grace period. at the end of the grace period, what happens to the $200 left in
the account?
a. the amount is forfeited
b. it will be added to his taxable income
c. he can use it to "buy" ab additional benefit
d. it ill carry over to the next year - Correct Answer✔️✔️-A. the amount is forfeited
Prior to beginning work for a company, a chemical engineer signed a contract stating that she agreed
to work as an independent contractor. she performs all her duties in the companys laboratories,
works under the companys direction, and maintains regular office hours. what is her status?
a. independent contractor under common law
b. independent contractor under reasonable basis test
c. employee - Correct Answer✔️✔️-C. employee
do not assume that the employer has fulfilled its responsibilities and is free from penalty simply by
having a worker sign a contract stating he is a 1099. individuals do not have a right to waive their ee
status in a contract.
A retired safety inspector for the company was rehired as a consultant when the company expanded
its plant operations. the retired employee was a natural choice. the tasks he undertook as a
consultant were the same as the ones he performed before retirement. paid monthly, he has agreed
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 2
,to work under the direction of his old boss until the new plant facilitates are fully operational? What
is his status?
a. independent contractor under common law
b. independent contractor under reasonable basis test
c. employee - Correct Answer✔️✔️-C. employee
consultants are generally treated as independent contractors. however, when an ex ee is performing
the same or similar job as before retirement, it is unlikely that he qualified as a 1099 after
termination
a receptionist has agreed to work afternoons at the company until the company can find a full time
replacement. what is the receptionists status?
a. independent contractor under common law
b. independent contractor under reasonable basis
c. employee - Correct Answer✔️✔️-C. employee
whether or not an ee is full time or part time or works a few weeks or a lifetime for the company is
not relevant her. she is an employee.
All of the following types of employees are classified as exempt from the FLSAs min wage and OT
requirements except:
a. professional
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, b. outside salesperson
c. administrative
d. computer repairman - Correct Answer✔️✔️-D. computer repairman
a computer repairman does not perform the duties required to qualify as an exempt computer
professional
a waitress is paid $2.25 per hour and she receives $225 in tips during the week. She works 4o hours
per week. Which of the following is true?
a. her employer is allowed to reduce her cash wage to no less than $2.13 per hour
b. her base pay must be increase to $4.5 per hour after a 90 day training period.
c. she must be paid $5.12 per hour by her employer
d. her base salary must be raised to $3 per hour to comply with fed min wage requirements. -
Correct Answer✔️✔️-A. her employer is allowed to reduce her cash wage to no less than $2.13 per
hour
her employer can claim the full federal tip credit because she receives tips and with her tips, is paid
more than the current federal minimum wage purposes, her employer must pay her at least $2.13 per
hour and her hourly rate plus tips must equal at least the current federal min wage
if a state sets the minimum wage at a rate greater than the federal minimum wage, the state
minimum wage must be paid to workers in that state
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