Betty's practice exam questions Flashcards by Jennifer Molina

Company deadlines for payroll data input documents are essential for which:
timely processing of the payroll

accurate entry of data

guaranteeing that all information is processed

adequate auditing purposes

timely processing of the payroll

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All of the following data elements are required to be maintained in the employee masterfile EXCEPT:

social security number

birth date

marital status

hourly rate of pay

marital status

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he fact that transactions affect two separate accounts of a business is called:

compound- entry accounting

double- entry accounting

accrual accounting

T- accounting

double- entry accounting

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Upward communication involves:

dissemination of management decisions to the staff

interactions between you and your manager

passing information to management

conducting quality circle meetings

passing information to management

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Which of the following answers BEST defines the term nonexempt under the FLSA?

a lower- paid class of employees

hourly- paid workers only

employees who must be paid overtime

a special class of employees as determined by the employer

employees who must be paid overtime

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For how many years must the employer’s copy of Form 940 be retained?

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Employees who are not eligible for direct deposit and receive paychecks sent through the mail are constructively paid:

on the check date

when the checks were postmarked

when the checks were delivered

when the checks were cashed

when the checks were delivered

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Copies of the production files and most recent payroll transactions are sent nightly to the parent company in a remote location. This practice is part of what type of plan?

security

control

disaster recovery

maintenance

disaster recovery

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Which of the following factors provides system security?

access level authorizations

shared passwords

conducting “physical payouts”

segregation of duties

access level authorizations

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Under the FLSA, how long are employers required to keep records relating to wages, hours, and conditions of employment?

3 years

4 years or until the file is no longer active

7 years

permanently

3 years

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What is the payroll department manager responsible for in a company with strong internal controls?

assuring segregation of duties in the department

developing company policy

initiating payroll transactions

writing the internal audit transaction test plan

assuring segregation of duties in the department

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The process of balancing multiple time sheets within a specified pay period utilizes a procedure know as:

batch totaling

exception reporting

system documentation

reconciliation

batch totaling

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On what form must mistakenly paid wages, for which no repayment is made, be reported?

W- 2

W- 4

1099- R

1099- MISC

W- 2

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A report has been requested that is NOT a standard report from the system. This type of report is called a(n):

ad- hoc report

integrated report

batch system report

edit report

ad- hoc report

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Which of the following statements is CORRECT regarding a federal tax levy?

It does not have to be honored if any other garnishments have been served.

It requires a new order for each pay period.

It is limited only by the amount of the employee’s net pay.

It is continued each pay period until a release of levy is received.

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Penalties for failure to make timely deposits are determined by:

a flat rate of 10% for late deposits

5% of the undeposited amount with a maximum of $100,000

15% of the undeposited amount with a maximum of $100,000

a four- tiered penalty structure based on the number of days the deposit is late

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Under the FLSA, a workweek is defined as:

any 7 consecutive 24- hour periods

Sunday through Saturday

a minimum of a 40- hour/5- day time frame

stated in a collective bargaining agreement

any 7 consecutive 24- hour periods

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At least how often must employers report noncash fringe benefits as income for federal tax withholding purposes?

each pay period

monthly

quarterly

annually

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Certain company records must be retained for four years to comply with regulations of which of the following agencies?

U.S. Citizenship and Immigration Services

Internal Revenue Service

Social Security Administration

Wage and Hour Division, Department of Labor

Internal Revenue Service

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To build morale and motivate staff, a manager must:

give good reviews and raises

reward “stars” and promote competition within each team

delegate accountability to staff members

be sincere and specific with praise

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From which of the following taxes are statutory workers’ compensation payments exempt?

federal income tax only

social security and Medicare taxes only

federal unemployment tax only

federal income, social security, Medicare, and federal unemployment taxes

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Which of the following items represents an input interface to the payroll system?

general ledger

time and attendance

benefit payments

material usage records

time and attendance

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One reason many companies use a Zero Balance Checking Account is that:

cash is available for investment until items are presented for payment at the company’s bank

funds do not have to be deposited until the employee cashes the check

the company receives interest on the account

bank reconciliations are not required

cash is available for investment until items are presented for payment at the company’s bank

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In a customer service situation, Payroll should:

assure the caller everything is okay, even when it is not

get in the last word

avoid addressing stressful issues

remain assertive and stay focused

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Each of the following items qualifies as a de minimis fringe benefit EXCEPT: occasional parties and picnics for employees occasional supper money for working overtime traditional holiday gifts, such as food items group legal services worth less than $100 annually

group legal services worth less than $100 annually

All of the following steps are required when initiating direct deposit for an employee EXCEPT: prenotification receiving financial institution routing number getting authorization from the employee receiving employee’s bank account number

prenotification

When paying supplemental wages along with regular wages WITHOUT specifying the amount of each, how would a company determine the amount of income tax to withhold from the supplemental wages if the employee has been paid no supplemental wages so far during the year and the supplemental wage payment is no more than $1,000,000? Withhold a flat 22% from the supplemental wages and withhold from regular wages using the appropriate table. Withhold a flat 22% from the supplemental wages. Withhold income tax as if the total were a single wage payment for a regular payroll period. Compute income tax withholding on the regular wages separate from the supplemental wages.

Withhold income tax as if the total were a single wage payment for a regular payroll period.

An employer that deposits payroll taxes semiweekly incurs a tax liability of $55,000 on Tuesday and a tax liability of $110,000 on Wednesday. When must the taxes be deposited? $55,000 on Thursday and $110,000 on Friday $55,000 on Friday and $110,000 on the next Wednesday $110,000 on Thursday and $55,000 on Friday $165,000 on Thursday

$110,000 on Thursday and $55,000 on Friday

Documenting payroll policies and procedures will provide all of the following results EXCEPT: a vehicle for improving processes a tool for assessing internal business controls a mechanism for educating payroll partners, suppliers, and customers assurances of payroll personnel competency and performance

assurances of payroll personnel competency and performance

Which of the following records MUST be kept for four years? hours worked time cards OSHA records voided payroll checks

voided payroll checks

Techniques for conducting periodic physical payouts: are the same for all employees vary by whether the employee is paid by check or direct deposit vary for some employees such as telecommuters vary by wage class and compensation level

are the same for all employees

Which of the following plans describes a cafeteria plan under section 125 of the Internal Revenue code? a quantified and accountable expense reimbursement plan a tax- qualified retirement plan for public educational institutions a plan which permits employees to select from two or more qualified taxable and nontaxable benefits a plan whereby state government employees may request that pretax dollars be set aside in a retirement account until age 59

a plan which permits employees to select from two or more qualified taxable and nontaxable benefits

Employers in non- credit reduction states that pay their state unemployment taxes on time can deduct up to what percentage from the full FUTA tax rate in calculating their FUTA tax payments? 0.6% 4.5% 5.4% 6.0%

5.4%

Which of the following items determines the disposition of unclaimed wages? state law only federal law only federal and state law not recognized procedures exist

state law only

Employee deferrals under section 401(k) are subject to which taxes? federal income, social security, and Medicare taxes social security and Medicare taxes only social security, Medicare, and FUTA taxes federal income, social security, Medicare, and FUTA taxes

social security, Medicare, and FUTA taxes

What does it mean if, at the end of an accounting period, a company has a debit balance in a liability account? The company has under deposited taxes withheld from employee wages. The company has not yet paid the third party. The company has withheld too much from the employee. The company has paid to a third party more than was withheld from the employee.

The company has paid to a third party more than was withheld from the employee.

All of the following factors are advantages of having an in- house developed payroll/HR system EXCEPT: scheduling flexibility user groups security control of the system

user groups

A payroll department manager should assure: independent mission statement appropriate training and equipment resources for staff members immediate enactment of employee suggestions top payment of staff

appropriate training and equipment resources for staff members

Which of the following statements describes a self- insured workers’ compensation plan? The state pays the workers’ compensation payments. The employer funds the workers’ compensation payments. The wages will continue as if the employee is still working. The individual employee is responsible for his own insurance.

The employer funds the workers’ compensation payments.

The proper handling of a stop payment includes all of the following steps EXCEPT: reversing the direct deposit canceling the payment in the payroll system notifying the bank account reconciliation employees documenting the reason for the transaction

reversing the direct deposit

A request for proposal (RFP) can be used to: provide vendors with technical and functional system requirements request funds during a budget process analyze needs for the system assign programming resources to enhance functionality

provide vendors with technical and functional system requirements

The Family and Medical Leave Act requires employers to maintain records for at least: 12 weeks 1 year 2 years 3 years

3 years

How may federal income tax be withheld from separation pay and accrued vacation wages totaling $20,000 that are paid at the time of termination and identified separately on the employee’s paystub, if the employee has been paid $25,000 so far this year and had income tax withheld from her most recent wage payment? using the aggregate method only using the prior 12 months’ tax rate at the optional flat rate for all payouts at termination only at the optional flat rate or using the aggregate method

at the optional flat rate or using the aggregate method

A payroll register for the pay period shows gross earnings of $300,000 and deductions of $120,000. The entry to the payroll expense account would be: $120,000 $180,000 $300,000 $420,000

$300,000

Payroll system user documentation should include: a copy of the RFP copies of project development documents details of disaster recovery procedures the history of the payroll system conversion

details of disaster recovery procedures

When checking for phantom employees, which of the following actions should be taken? Notify the employees of an impending physical payout. Have the managers hand checks out to their employees. Have employees pick up checks and direct deposit/paycard advices and show identification. Mail checks directly to employees’ homes.

Have employees pick up checks and direct deposit/paycard advices and show identification.

Which form is used to request an employer identification number? I- 9 SS- 4 SS- 5 SS- 8

SS- 4

One element of a payroll calendar is: pay frequency hire dates total remuneration social security numbers

pay frequency

With online input, what is the BEST way to control miscellaneous payments? verification of a sample of entered data a visual audit of the online activity report an auditor’s comparison of each input source document to the data base record a comparison of the online report totals to predetermined totals taken from the source documents

a comparison of the online report totals to predetermined totals taken from the source documents

Employer- sponsored athletic facilities may be nontaxable fringe benefits if the: employer requires substantiation of the amount, time, and business purpose of the facilities’ use employer incurs no substantial additional cost, except labor, to provide the facilities facilities are on the employer’s premises facilities qualify as a de minimis fringe

facilities are on the employer’s premises

All of the following actions demonstrate a strong customer service orientation EXCEPT: exhibiting a customer friendly attitude viewing customers as the most important part of the job using voice mail to answer phone calls from customers establishing relationships with people

sing voice mail to answer phone calls from customers

When an employer is advised by the IRS that an employee’s Form W- 4 is invalid, what action must the employer take? All future Forms W- 4 must be sent to the IRS as long as the employee is being paid. Employers have no obligation to change exemptions unless notified by the employee through a new Form W- 4. Withhold on the basis of information provided by the IRS. The employer should send a notice at the end of the quarter, requesting that the employee contact the IRS to clear up the problem.

Withhold on the basis of information provided by the IRS.

An employee who works for more than one employer and has exceeded the social security wage base may: take a credit against federal income tax on Form 1040 demand that the employer refund the overage apply the social security tax to next year’s withholdings apply the overage to benefits paid at age 65

take a credit against federal income tax on Form 1040

When determining the value of employer- provided parking, which of the following valuation methods is allowed? employer’s cost employee’s cost lower of employee’s cost or fair market value fair market value

fair market value

What is the purpose of the payroll accrual entry? to recognize expenses in the period in which they were incurred to reverse an entry made in error to recognize expenses in the period in which they were paid to reverse an entry from a previous period

to recognize expenses in the period in which they were incurred

Which of the following steps is LEAST important during the parallel testing phase of a new payroll system? the testing of employee earnings and deductions accuracy the verification of employees transferred to the new system from the old system the verification of tax withholding calculations for employees testing the functionality of a wage attachment process

testing the functionality of a wage attachment process

All of the following types of compensation are subject to social security tax EXCEPT: tips under $100 deferred bonus third- party sick pay up to $3,000 workers’ compensation benefits

workers’ compensation benefits

Which of the following outcomes is the PRIMARY advantage of developing an in- house system? Outsiders are not involved in a firm’s daily operations. Costs are reduced and can be distributed on an equitable basis. The employer controls the entire computer system. Time is saved by not having to explain business policies and practices.

The employer controls the entire computer system.

An employee covered by group health insurance at the time his employment terminates to return to school is entitled to COBRA continuation rights for: 12 months 18 months 24 months 30 months

18 months

How often are Form 940 taxable wages reported? annually semi- annually quarterly monthly

annually

On a company’s financial statements, payroll tax expense appears in the: balance sheet accrued payroll salaries expense income statement

income statement

What is the chief advantage of a vendor payroll package? reduced processing time inexpensiveness and ease of installation no required major in- house system development lower cost than a service provider contract

no required major in- house system development

Which of the following elements is essential to a disaster recovery plan? an excess supply of checks and direct deposit stubs a compatible off- site remote location to produce payrolls detailed documentation of current company policies a procedure for limiting security system access

a compatible off- site remote location to produce payrolls

Which of the following practices is a strong internal control procedure? Have the payroll bank account reconciled in the payroll department. Have the payroll manager distribute paychecks. Place payroll checks under the personal control of the payroll manager. Have a person other than the person who requested and authorized the payments prepare the payroll checks.

Have a person other than the person who requested and authorized the payments prepare the payroll checks.

During 2024, an employee worked for company A and quit after earning $150,000. Later in the same year the employee was hired by company B. With respect to social security, Medicare and FUTA, how should company B treat the employee’s earnings as of the first wage payment? Start accumulating social security, Medicare, and FUTA wages, and withhold both social security and Medicare taxes. Start accumulating Medicare wages only, and withhold only Medicare tax. Start accumulating social security, Medicare, and FUTA wages, but withhold Medicare tax only. Start accumulating Medicare wages only, but withhold both social security and Medicare taxes.

Start accumulating social security, Medicare, and FUTA wages, and withhold both social security and Medicare taxes.

Which of the following documents proves an employee’s identity and authorization to work? social security card unexpired U.S. passport birth certificate Form I- 9

unexpired U.S. passport

How are salaries reflected on the income statement? income assets accruals expenses

expenses

All of the following techniques would enhance the level of customer service EXCEPT: adding more customer service personnel publishing payroll customer service procedures, calendars, and directories utilizing automated call processing tools to take and process caller inquiries training company management on pay calculation and tax withholding rules

training company management on pay calculation and tax withholding rules

The KEY difference between user guides and payroll policies and procedures is: User guides focus on tasks associated with automated tools. Payroll policies and procedures set company policies and standards. User guides help payroll personnel interpret company policy. Payroll policies and procedures permit human resources to design new compensation and benefits programs.

User guides focus on tasks associated with automated tools.

A local national is defined as an employee: from another country working in the U.S. from the U.S. working in a foreign country from a foreign company working in the U.S. from a foreign country working in his or her home country location

from a foreign country working in his or her home country location

One employment data element in the masterfile is: hourly rate of pay marital status birthdate occupation

hourly rate of pay

Which of the following authorities dictates the information provided on a payroll check stub? individual states Federal Unemployment Tax Act Federal Wage and Hour Division Social Security Administration

individual states

Which of the following forms may be submitted to the IRS in order to receive a written determination of a worker’s status as an employee or independent contractor? Form W- 5 Form SS- 5 Form SS- 8 Form W- 9

Form SS- 8

A company pays all executives semimonthly. The FLSA requires all other employees to be paid on: a weekly cycle a biweekly cycle a semimonthly cycle any established cycle

any established cycle

To exhibit good customer service skills, payroll staff must understand and be able to explain: payroll forms benefits enrollment techniques systems design decisions strategic departmental direction

payroll forms

Transactions are recorded in chronological order into books of original entry called: registers vouchers invoices journals

journals

A team comprised of members of a department’s staff with the intention of improving their own process is a: cross- functional team conversion team functional team management team

functional team

All of the following practices are acceptable to an external auditor EXCEPT: the accounting department reconciling the payroll checking account the payroll supervisor verifying that deposits are made timely storage of blank payroll checks in the payroll department the treasury department being responsible for the signature of payroll checks

storage of blank payroll checks in the payroll department

Which of the following features is LEAST likely to be considered when looking at the security of a new payroll system? regular data back-up and storage limit system access protection against computer viruses system edits

system edits

As part of the implementation of a new payroll system, all transactions from the most recent actual payroll are processed in the new system prior to using the system to run payrolls. This is an example of what type of resting? compliance back- up ongoing parallel

parallel

The KEY advantage of using an automated time and attendance system is that it: identifies phantom employees reduces errors interfaces with the payroll system frees supervisors from having to review hours

reduces errors

With regard to employees’ reported tips, the employer must: withhold and pay only the employees’ portion of social security and Medicare taxes on tips report taxes on tips separately when making an employment tax deposit report tips as wages on Form W- 2 and pay the employer portion of social security and Medicare taxes report and pay the employer portion of social security and Medicare taxes on the portion of cash tips above the federal minimum wage

report tips as wages on Form W- 2 and pay the employer portion of social security and Medicare taxes

A procedure to have a time record signed by an employee indicates: authorization for payment confirmation of total hours hours cannot be challenged time spent at the establishment

confirmation of total hours

What is the effect of failing to record salaries that are earned but not paid at the end of an accounting period? understatement of expenses for the period overstatement of expenses for the period understatement of assets for the period overstatement of liabilities for the period

understatement of expenses for the period

All of the following data elements are required to be maintained in the employee masterfile EXCEPT: social security number birth date marital status hourly rate of pay

marital status

The BEST reason for tracking pay-related problem statistics is to enable Payroll to: identify root causes and take actions to prevent similar recurrences apologize to clients in a more professional manner direct problems to those who cause the problem justify more resources to handle more problems

identify root causes and take actions to prevent similar recurrences

Betty's practice exam questions Flashcards

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