CHAPTER 1 PAYROLL
FUNDAMENTALS QUESTIONS AND
CORRECT ANSWERS (2026
REVISION)
Payroll's Chief Product - the paycheck or pay statement - must be: - ANS -Both accurate and
timely
What taxes, if any, must be withheld from an employee's pay? - ANS -Federal income, social
security, and Medicare
What taxes, if any must be withheld from an independent contractor's pay who provides a TIN?
- ANS -No taxes are withheld
Who has responsibility to determine if the worker is an employee or independent contractor? -
ANS -Hiring entity
Prior to beginning work for a company, a chemical engineer signed a contract stating the she
agreed to work as an independent contractor. She performs all her duties in the company's
laboratories, where she has full access to the company's testing equipment. She works under
their direction and maintains regular office hours. What is her status? - ANS -Employee
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 one he performed before retirement. Paid
monthly, he has agreed to work under the direction of his old boss until the new plant facilities
are fully operational. What is his status? - ANS -Employee
, A receptionist has agreed to work afternoons at the company until they can find a full-time
replacement. What is the receptionist status? - ANS -Employee
Which of the following workers is an independent contractor? - ANS -A lecturer who is paid a
percentage of the money collected at fundraisers when he speaks on behalf of a non profit clinic
What are exempt employees exempt from? - ANS -Minimum wage and overtime
All of the following type of employees are classified as exempt from the FLSA's minimum wage
and overtime requirements except: - ANS -Computer repairman
A waitress is paid $2.25 per hour, and she receives $255.00 in tips during the week. She works
40 hours per week. Which of the following is true? - ANS -Her employer is allowed to reduce her
cash wage to no less than 2.13 per hour.
What is the federal minimum wage? - ANS -$7.25
If a state sets the minimum wage greater than the federal minimum wage the state minimum
wage must be paid to workers in that state. - ANS -True
A non exempt employee works in a state with a minimum wage of $7.35 per hour, while living in
a state with a minimum wage of $8.05. What is the minimum rate he must be paid? - ANS -
$7.35
Tips can be counted toward the employees minimum wage? - ANS -True
FUNDAMENTALS QUESTIONS AND
CORRECT ANSWERS (2026
REVISION)
Payroll's Chief Product - the paycheck or pay statement - must be: - ANS -Both accurate and
timely
What taxes, if any, must be withheld from an employee's pay? - ANS -Federal income, social
security, and Medicare
What taxes, if any must be withheld from an independent contractor's pay who provides a TIN?
- ANS -No taxes are withheld
Who has responsibility to determine if the worker is an employee or independent contractor? -
ANS -Hiring entity
Prior to beginning work for a company, a chemical engineer signed a contract stating the she
agreed to work as an independent contractor. She performs all her duties in the company's
laboratories, where she has full access to the company's testing equipment. She works under
their direction and maintains regular office hours. What is her status? - ANS -Employee
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 one he performed before retirement. Paid
monthly, he has agreed to work under the direction of his old boss until the new plant facilities
are fully operational. What is his status? - ANS -Employee
, A receptionist has agreed to work afternoons at the company until they can find a full-time
replacement. What is the receptionist status? - ANS -Employee
Which of the following workers is an independent contractor? - ANS -A lecturer who is paid a
percentage of the money collected at fundraisers when he speaks on behalf of a non profit clinic
What are exempt employees exempt from? - ANS -Minimum wage and overtime
All of the following type of employees are classified as exempt from the FLSA's minimum wage
and overtime requirements except: - ANS -Computer repairman
A waitress is paid $2.25 per hour, and she receives $255.00 in tips during the week. She works
40 hours per week. Which of the following is true? - ANS -Her employer is allowed to reduce her
cash wage to no less than 2.13 per hour.
What is the federal minimum wage? - ANS -$7.25
If a state sets the minimum wage greater than the federal minimum wage the state minimum
wage must be paid to workers in that state. - ANS -True
A non exempt employee works in a state with a minimum wage of $7.35 per hour, while living in
a state with a minimum wage of $8.05. What is the minimum rate he must be paid? - ANS -
$7.35
Tips can be counted toward the employees minimum wage? - ANS -True
