1. Which of the following is NOT considered taxable income for
employees?
A. Salary
B. Bonuses
C. Employee discounts on merchandise
D. Overtime pay
Answer: C) Employee discounts on merchandise
Rationale: Employee discounts on merchandise are generally not
considered taxable income unless they exceed a certain threshold.
2. Which of the following is an example of a pre-tax payroll
deduction?
A. Child support payments
B. Health insurance premiums
C. Roth IRA contributions
D. Federal tax withholding
Answer: B) Health insurance premiums
Rationale: Pre-tax deductions, like health insurance premiums,
reduce an employee's taxable income before calculating federal
income tax, Social Security, and Medicare taxes.
,3. Which of the following is true regarding payroll taxes for
independent contractors?
A. Independent contractors are subject to federal income tax
withholding
B. Independent contractors pay Social Security and Medicare
taxes through self-employment tax
C. Independent contractors receive W-2 forms at the end of the
year
D. Employers withhold state income taxes for independent
contractors
Answer: B) Independent contractors pay Social Security and
Medicare taxes through self-employment tax
Rationale: Independent contractors are not subject to federal
withholding but are responsible for paying both the employer and
employee portion of Social Security and Medicare taxes through
self-employment tax.
4. Which of the following best describes "fringe benefits"?
A. Taxable wages
B. Benefits given to employees in addition to regular wages
C. Deductions for retirement plans
D. Overtime pay
Answer: B) Benefits given to employees in addition to regular
wages
, Rationale: Fringe benefits are non-wage compensations provided
to employees, such as health insurance, retirement plans, and
company cars.
5. What is the term used for the total compensation an employee
earns before any deductions?
A. Net pay
B. Gross pay
C. Base salary
D. Taxable income
Answer: B) Gross pay
Rationale: Gross pay is the total earnings before any deductions
such as taxes, benefits, or retirement contributions.
6. Which of the following is true regarding overtime pay?
A. Overtime pay is required for all employees, regardless of job
duties
B. Overtime pay is calculated as time and a half for hours worked
beyond 40 in a workweek
C. Overtime pay is calculated as double the hourly rate for hours
worked beyond 40 in a workweek
D. Overtime pay is not required for salaried employees
Answer: B) Overtime pay is calculated as time and a half for hours
worked beyond 40 in a workweek
employees?
A. Salary
B. Bonuses
C. Employee discounts on merchandise
D. Overtime pay
Answer: C) Employee discounts on merchandise
Rationale: Employee discounts on merchandise are generally not
considered taxable income unless they exceed a certain threshold.
2. Which of the following is an example of a pre-tax payroll
deduction?
A. Child support payments
B. Health insurance premiums
C. Roth IRA contributions
D. Federal tax withholding
Answer: B) Health insurance premiums
Rationale: Pre-tax deductions, like health insurance premiums,
reduce an employee's taxable income before calculating federal
income tax, Social Security, and Medicare taxes.
,3. Which of the following is true regarding payroll taxes for
independent contractors?
A. Independent contractors are subject to federal income tax
withholding
B. Independent contractors pay Social Security and Medicare
taxes through self-employment tax
C. Independent contractors receive W-2 forms at the end of the
year
D. Employers withhold state income taxes for independent
contractors
Answer: B) Independent contractors pay Social Security and
Medicare taxes through self-employment tax
Rationale: Independent contractors are not subject to federal
withholding but are responsible for paying both the employer and
employee portion of Social Security and Medicare taxes through
self-employment tax.
4. Which of the following best describes "fringe benefits"?
A. Taxable wages
B. Benefits given to employees in addition to regular wages
C. Deductions for retirement plans
D. Overtime pay
Answer: B) Benefits given to employees in addition to regular
wages
, Rationale: Fringe benefits are non-wage compensations provided
to employees, such as health insurance, retirement plans, and
company cars.
5. What is the term used for the total compensation an employee
earns before any deductions?
A. Net pay
B. Gross pay
C. Base salary
D. Taxable income
Answer: B) Gross pay
Rationale: Gross pay is the total earnings before any deductions
such as taxes, benefits, or retirement contributions.
6. Which of the following is true regarding overtime pay?
A. Overtime pay is required for all employees, regardless of job
duties
B. Overtime pay is calculated as time and a half for hours worked
beyond 40 in a workweek
C. Overtime pay is calculated as double the hourly rate for hours
worked beyond 40 in a workweek
D. Overtime pay is not required for salaried employees
Answer: B) Overtime pay is calculated as time and a half for hours
worked beyond 40 in a workweek
