CPP STUDY SET EXAM QUESTIONS
WITH VERIFIED ANSWERS
What payments must be considered when calculating an employee's regular rate of
pay for overtime purposes? - ANSWER-Shift differentials, non discretionary
bonuses, payments in a form other than cash, retroactive pay, on-cal pay,
supplemental disability payments, sick leave buyback payments, per diem pay.
What payments are not included in the regular rate of pay for overtime purposes? -
ANSWER-Gifts, paid time off and reimbursed expenses, discretionary bonuses,
volunteer work counted toward group's bonus, benefit plan contributions, stock
options, overtime compensation, premium pay for extra days worked, premium pay
under a union contract for extra hours.
What are salaried nonexempt employees? - ANSWER-Employees whose salaries do
NOT exceed a certain level and who do NOT meet the duties and responsibilities
tests for exemption are classified as exempted. These employees must be paid
overtime. The regular rate of pay for such employees is determined by dividing he
employee's salary by the number of hours the salary in intended to compensate. The
easiest way to calculate this is to take the employee's annual salary and divide it by
the number of hours to be compensated in a year.
Salaried nonexempt employees workweeks of less than 40 hours. - ANSWER-It is
not a violation of the FLSA's minimum wage or overtime provisions if the employee is
not paid for gap time, as long as they are receiving at least minimum wage for the
total number of hours worked. But if that employee works more than 40 hours in a
workweek, they must be paid their regular rate of pay for all hours worked, plus the
premium pay (1/2 the regular rate) for any hours over 40.
What is a belo-type constant wage plan? - ANSWER-A plan that guarantees a fixed
salary for irregular hours that includes a set amount of overtime pay. To qualify: The
plan must be agreed to by the employee through an individual contract or collective
bargaining agreement; the employee must work irregular hours (with workweeks
fluctuating above 40 hours); the contract must guarantee a straight time rate of at
least the statutory minimum and an overtime rate of at least 1 1/2 time the regular
rate; and, the weekly guarantee must be for not more than 60 hours of work.
Which account is generally listed first on a corporate balance sheet? - ANSWER-
Prepaid expenses
What is a key advantage of processing payroll with a service provider compared to
an in-house payroll system? - ANSWER-No initial investment, no maintenance
What kind of account is accrued salaries payable? - ANSWER-Liability
Lower Opportunity Wage for Teenagers - ANSWER-The minimum wage for newly
hired employees under the age of 20 is $4.25 per hour for the first 90 consecutive
calendar days after they ar employed, unless the employee is covered by a state law
,requiring a higher minimum wage. If the employee reaches age 20 during the 90-day
period, the EE must be paid at least the federal minimum wage in effect as of the
EE's bday on or after their 20th bday.
Overtime for Hospitals and Nursing Homes - ANSWER-The FLSA contains an
exemption to the workweek standard for hospitals and nursing homes that is
designed to give them more flexibility in scheduling. The law allows such employes
to use a 14-day period rather than the workweek for determining overtime
compensation. All of the following conditions must be met:
What needs to be done when a workweek is changed? - ANSWER-Calculate the
overlapping days for both the old week and new week - use higher.
1) add the overlapping days to the old workweek. 2) calculate the overtime hours
and pay due for the old and new workweeks on this basis. 3) add the overlapping
days to the new workweek. 4) Calculate the overtime hours and pay due for the old
and new workweeks on this basis. 5) Pay the employee the greater amount from
step 2 or step 4.
What is regular rate of pay? - ANSWER-The regular rate of pay is an hourly pay rate
determined by dividing the total regular pay actually earned for the workweek by the
total number of hours worked. The required overtime pay under the FLAS is 1 1/2
times the employee's regular rate of pay.
An employer has received multiple attachments for an employee. The orders were
received in the following sequence: Federal tax levy, consumer garnishment, and
child support payment order. In which order are the attachments applied against the
employee's wages? - ANSWER-Federal levy, child support payment, consumer
garnishment. Child support would have taken priority if it had been received prior to
the federal levy.
Under the principle of double-entry bookkeeping, what can a credit to an account
signify? - ANSWER-An increase in a liability account
When using vendor-supplied software to process payroll, what is considered a
disadvantage? - ANSWER-Specific needs may not be met
Which W-2 Box 12 code is used for a 403(b) plan? - ANSWER-E (E for Education)
What phase of in-house system design follows the Development Phase? -
ANSWER-User Testing Phase
Which management theory reviews the differences between managers and leaders?
- ANSWER-Kotter
Which of following is one of the five steps of empowerment? - ANSWER-Provide
guidelines
,What are the 5 empowerment process steps? - ANSWER-1) establish the desired
results; 2) provide guidelines; 3) identify resources available to accomplish the task;
4) hold people accountable and 5) identify consequences.
Which form notifies an employer that an employee's wages have been released from
a levy? - ANSWER-668 - D
What journal entries are required to record $250,000.00 in salaries earned during the
last week of July but paid in August? - ANSWER-Debit salary expense; credit salary
payable
What is NOT a staffing concern? - ANSWER-Evaluating next year's staff budget
Compensatory Time Off - ANSWER-Because the workweek is the FLSA's basic unit
of time used in determining whether overtime pay is due an employee, employers
generally cannot pay overtime earned in one workweek by giving the employee time
off from work in another workweek, even if 1 1/2 hours off are given for each
overtime hour worked. But there are exceptions to the general rule.
Time Spent at Meetings and Training Sessions (Worktime) - ANSWER-Attendance
at lectures, meetings, seminars, and training sessions is worktime unless all the
following conditions are met: 1) The meetings, lecture, etc., is held outside of the
employee's regular working hours. 2) Attendance is voluntary (not a condition of
employment). 3) The meeting, lecture, etc., is not directly related to the employee's
job; and 4) the employee does not perform any productive work for the employer
while attending.
Child Labor Restrictions for minors under age 18. - ANSWER-No minor under age
18 can work in a job that has been declared hazardous by the Wage and Hour
Division.
Child labor restrictions for minors 14 and 15. - ANSWER-Minors 14 and 15 can work
in a limited number of nonhazardous jobs in retail, food service, and gasoline service
establishments. They cannot work during school hours nad are limited to working 3
hours a day and 18 hours a week when school is in session. They are limited to 8
hours a day and 40 a week when school is not in session. They also can work only
between 7 am and 7 pm (7am and 9pm from June 1 through Labor Day).
Child labor restrictions for minors under age 14. - ANSWER-Employment is generally
prohibited, unless the minor is working for a parent, and even those jobs cannot be
hazardous or in mining or manufacturing.
Define the Walsh-Healey Public Contracts Act - ANSWER-This governs the wages
and hours of employees of manufacturers and dealers furnishing the federal
government with materials, supplies, and equipment under contracts exceeding
$10,000. This act requires covered employees to be paid 1 1/2 times their basic
(regular) rate of pay for all hours physically worked over 40 in a workweek. They also
must be paid the prevailing minimum wage for work in the same or similar industry in
the locality where the goods are manufactured or furnished.
, Davis-Bacon Act - ANSWER-Wage Rates for Public Buildings and Works. Under this
act, the Secretary of Labor sets prevailing minimum wage standards for laborer and
mechanics working on federally financed construction contracts of $2,000 or more.
Contract Work Hours and Safety Standards Act - ANSWER-This act requires
contractors with the federal government (not those already covered by Walsh-
Healey) to pay employees overtime of at least 1 1/2 times their "basic rate" for hours
worked over 40 in a workweek. The law applies to contracts over $100,000.
The McNamara-O'Jara Service Contract Act - ANSWER-This act applies to
employers that contract with the federal government to provide services to a federal
agency. It applies to contracts over $2,500 and requires that employees be paid
prevailing minimum wages and fringe benefits based on the wages and benefits for
similar employment in the locality or on a collective bargaining agreement, but no
less than the minimum wage under the FLSA.
What is the IRC's definition of wages? - ANSWER-All remuneration for employment,
including the cash value of all remuneration (including benefits) paid in any medium
other than cash. This means that wages and benefits are generally included in
income and are subject to income and employment tax withholding, deposit, and
reporting requirements unless the IRC says otherwise.
What are employment taxes? - ANSWER-Social security, medicare and
unemployment taxes.
Fair Market Value - Fringe Benefits - ANSWER-The amount of the benefit the
employer must include as income to the employee is the amount by which the fair
market value exceeds the amount paid for the benefit after taxes plus any amount
the law specifically excludes: Includable fringe benefit amount (IFBA) = Fair Market
Value (FMV) - (Employee Paid Amount (with after-tax dollars) (EPA) + Amount
excluded by law (AEL). Or IFBA=FMV-(EPA+AEL)
Non-Taxable Fringe Benefits - ANSWER-Once certain conditions are met, the
Internal Revenue code exempts certain fringe benefits from being included as
income. This means they are NOT subject to federal income tax withholding, or
social security, Medicare or FUTA taxes. they include: no additional cost services;
qualified employee discounts; working condition fringes; de minimis fringes; qualified
transportation benefits; on-premises athletic facilities; qualified retirement planning
services; and, qualified moving expense reimbursement.
No Additional Cost Services - ANSWER-An employer may offer free services to its
employees without including the fair market value of those services in the
employee's income if the following conditions are met: 1) The free service is one that
is regularly offered for sale to customers in the normal course of the employer's line
of business in which the employee works. 2) The employer bears no substantial
additional cost. 3) The term employee includes current and former employees who
left because of retirement or disability and their widow(er)s, spouses, and dependent
children. 4) The service is available on equal terms to each member of a group of
employees whose classification does not discriminate in favor of highly compensated
employees.
WITH VERIFIED ANSWERS
What payments must be considered when calculating an employee's regular rate of
pay for overtime purposes? - ANSWER-Shift differentials, non discretionary
bonuses, payments in a form other than cash, retroactive pay, on-cal pay,
supplemental disability payments, sick leave buyback payments, per diem pay.
What payments are not included in the regular rate of pay for overtime purposes? -
ANSWER-Gifts, paid time off and reimbursed expenses, discretionary bonuses,
volunteer work counted toward group's bonus, benefit plan contributions, stock
options, overtime compensation, premium pay for extra days worked, premium pay
under a union contract for extra hours.
What are salaried nonexempt employees? - ANSWER-Employees whose salaries do
NOT exceed a certain level and who do NOT meet the duties and responsibilities
tests for exemption are classified as exempted. These employees must be paid
overtime. The regular rate of pay for such employees is determined by dividing he
employee's salary by the number of hours the salary in intended to compensate. The
easiest way to calculate this is to take the employee's annual salary and divide it by
the number of hours to be compensated in a year.
Salaried nonexempt employees workweeks of less than 40 hours. - ANSWER-It is
not a violation of the FLSA's minimum wage or overtime provisions if the employee is
not paid for gap time, as long as they are receiving at least minimum wage for the
total number of hours worked. But if that employee works more than 40 hours in a
workweek, they must be paid their regular rate of pay for all hours worked, plus the
premium pay (1/2 the regular rate) for any hours over 40.
What is a belo-type constant wage plan? - ANSWER-A plan that guarantees a fixed
salary for irregular hours that includes a set amount of overtime pay. To qualify: The
plan must be agreed to by the employee through an individual contract or collective
bargaining agreement; the employee must work irregular hours (with workweeks
fluctuating above 40 hours); the contract must guarantee a straight time rate of at
least the statutory minimum and an overtime rate of at least 1 1/2 time the regular
rate; and, the weekly guarantee must be for not more than 60 hours of work.
Which account is generally listed first on a corporate balance sheet? - ANSWER-
Prepaid expenses
What is a key advantage of processing payroll with a service provider compared to
an in-house payroll system? - ANSWER-No initial investment, no maintenance
What kind of account is accrued salaries payable? - ANSWER-Liability
Lower Opportunity Wage for Teenagers - ANSWER-The minimum wage for newly
hired employees under the age of 20 is $4.25 per hour for the first 90 consecutive
calendar days after they ar employed, unless the employee is covered by a state law
,requiring a higher minimum wage. If the employee reaches age 20 during the 90-day
period, the EE must be paid at least the federal minimum wage in effect as of the
EE's bday on or after their 20th bday.
Overtime for Hospitals and Nursing Homes - ANSWER-The FLSA contains an
exemption to the workweek standard for hospitals and nursing homes that is
designed to give them more flexibility in scheduling. The law allows such employes
to use a 14-day period rather than the workweek for determining overtime
compensation. All of the following conditions must be met:
What needs to be done when a workweek is changed? - ANSWER-Calculate the
overlapping days for both the old week and new week - use higher.
1) add the overlapping days to the old workweek. 2) calculate the overtime hours
and pay due for the old and new workweeks on this basis. 3) add the overlapping
days to the new workweek. 4) Calculate the overtime hours and pay due for the old
and new workweeks on this basis. 5) Pay the employee the greater amount from
step 2 or step 4.
What is regular rate of pay? - ANSWER-The regular rate of pay is an hourly pay rate
determined by dividing the total regular pay actually earned for the workweek by the
total number of hours worked. The required overtime pay under the FLAS is 1 1/2
times the employee's regular rate of pay.
An employer has received multiple attachments for an employee. The orders were
received in the following sequence: Federal tax levy, consumer garnishment, and
child support payment order. In which order are the attachments applied against the
employee's wages? - ANSWER-Federal levy, child support payment, consumer
garnishment. Child support would have taken priority if it had been received prior to
the federal levy.
Under the principle of double-entry bookkeeping, what can a credit to an account
signify? - ANSWER-An increase in a liability account
When using vendor-supplied software to process payroll, what is considered a
disadvantage? - ANSWER-Specific needs may not be met
Which W-2 Box 12 code is used for a 403(b) plan? - ANSWER-E (E for Education)
What phase of in-house system design follows the Development Phase? -
ANSWER-User Testing Phase
Which management theory reviews the differences between managers and leaders?
- ANSWER-Kotter
Which of following is one of the five steps of empowerment? - ANSWER-Provide
guidelines
,What are the 5 empowerment process steps? - ANSWER-1) establish the desired
results; 2) provide guidelines; 3) identify resources available to accomplish the task;
4) hold people accountable and 5) identify consequences.
Which form notifies an employer that an employee's wages have been released from
a levy? - ANSWER-668 - D
What journal entries are required to record $250,000.00 in salaries earned during the
last week of July but paid in August? - ANSWER-Debit salary expense; credit salary
payable
What is NOT a staffing concern? - ANSWER-Evaluating next year's staff budget
Compensatory Time Off - ANSWER-Because the workweek is the FLSA's basic unit
of time used in determining whether overtime pay is due an employee, employers
generally cannot pay overtime earned in one workweek by giving the employee time
off from work in another workweek, even if 1 1/2 hours off are given for each
overtime hour worked. But there are exceptions to the general rule.
Time Spent at Meetings and Training Sessions (Worktime) - ANSWER-Attendance
at lectures, meetings, seminars, and training sessions is worktime unless all the
following conditions are met: 1) The meetings, lecture, etc., is held outside of the
employee's regular working hours. 2) Attendance is voluntary (not a condition of
employment). 3) The meeting, lecture, etc., is not directly related to the employee's
job; and 4) the employee does not perform any productive work for the employer
while attending.
Child Labor Restrictions for minors under age 18. - ANSWER-No minor under age
18 can work in a job that has been declared hazardous by the Wage and Hour
Division.
Child labor restrictions for minors 14 and 15. - ANSWER-Minors 14 and 15 can work
in a limited number of nonhazardous jobs in retail, food service, and gasoline service
establishments. They cannot work during school hours nad are limited to working 3
hours a day and 18 hours a week when school is in session. They are limited to 8
hours a day and 40 a week when school is not in session. They also can work only
between 7 am and 7 pm (7am and 9pm from June 1 through Labor Day).
Child labor restrictions for minors under age 14. - ANSWER-Employment is generally
prohibited, unless the minor is working for a parent, and even those jobs cannot be
hazardous or in mining or manufacturing.
Define the Walsh-Healey Public Contracts Act - ANSWER-This governs the wages
and hours of employees of manufacturers and dealers furnishing the federal
government with materials, supplies, and equipment under contracts exceeding
$10,000. This act requires covered employees to be paid 1 1/2 times their basic
(regular) rate of pay for all hours physically worked over 40 in a workweek. They also
must be paid the prevailing minimum wage for work in the same or similar industry in
the locality where the goods are manufactured or furnished.
, Davis-Bacon Act - ANSWER-Wage Rates for Public Buildings and Works. Under this
act, the Secretary of Labor sets prevailing minimum wage standards for laborer and
mechanics working on federally financed construction contracts of $2,000 or more.
Contract Work Hours and Safety Standards Act - ANSWER-This act requires
contractors with the federal government (not those already covered by Walsh-
Healey) to pay employees overtime of at least 1 1/2 times their "basic rate" for hours
worked over 40 in a workweek. The law applies to contracts over $100,000.
The McNamara-O'Jara Service Contract Act - ANSWER-This act applies to
employers that contract with the federal government to provide services to a federal
agency. It applies to contracts over $2,500 and requires that employees be paid
prevailing minimum wages and fringe benefits based on the wages and benefits for
similar employment in the locality or on a collective bargaining agreement, but no
less than the minimum wage under the FLSA.
What is the IRC's definition of wages? - ANSWER-All remuneration for employment,
including the cash value of all remuneration (including benefits) paid in any medium
other than cash. This means that wages and benefits are generally included in
income and are subject to income and employment tax withholding, deposit, and
reporting requirements unless the IRC says otherwise.
What are employment taxes? - ANSWER-Social security, medicare and
unemployment taxes.
Fair Market Value - Fringe Benefits - ANSWER-The amount of the benefit the
employer must include as income to the employee is the amount by which the fair
market value exceeds the amount paid for the benefit after taxes plus any amount
the law specifically excludes: Includable fringe benefit amount (IFBA) = Fair Market
Value (FMV) - (Employee Paid Amount (with after-tax dollars) (EPA) + Amount
excluded by law (AEL). Or IFBA=FMV-(EPA+AEL)
Non-Taxable Fringe Benefits - ANSWER-Once certain conditions are met, the
Internal Revenue code exempts certain fringe benefits from being included as
income. This means they are NOT subject to federal income tax withholding, or
social security, Medicare or FUTA taxes. they include: no additional cost services;
qualified employee discounts; working condition fringes; de minimis fringes; qualified
transportation benefits; on-premises athletic facilities; qualified retirement planning
services; and, qualified moving expense reimbursement.
No Additional Cost Services - ANSWER-An employer may offer free services to its
employees without including the fair market value of those services in the
employee's income if the following conditions are met: 1) The free service is one that
is regularly offered for sale to customers in the normal course of the employer's line
of business in which the employee works. 2) The employer bears no substantial
additional cost. 3) The term employee includes current and former employees who
left because of retirement or disability and their widow(er)s, spouses, and dependent
children. 4) The service is available on equal terms to each member of a group of
employees whose classification does not discriminate in favor of highly compensated
employees.
