Which of the following does NOT represent a deductible business expense?
- A . Lodging while on business travel
- B . Golfing event following a business meeting
- C . Dry cleaning charges while out of town on business
- D . Country club dues
Bass Biting Company operates bait, tackle and boat sales store employing 12 full time clerks and salespeople in addition to the owner and his family members. Occasionally, Bass Biting assigns special work to individuals other than its regular employees and family members. Bass Biting engaged a carpenter, Jim to build a boat dock so that customers could access the shop via boat. Jim has several docks in progress for other local merchants. Bass Batting’s dock took 4 days to build, 13 hours each day. Bass Biting paid Jim $500 for 4 days’ work. Calculate overtime due Jim under FLSA.
- A . $57.72
- B . $557.44
- C . $0
- D . $173.04
A pre notification may be used when an employee:
- A . Has insufficient funds in a checking account
- B . Loses a paycheck
- C . Is relocated
- D . Changes banking institutions
In maintaining a payroll system, change control refers to:
- A . Procedures to test and schedule changes before they are put into production
- B . Entering new data to an employee’s record
- C . Creating a new system in a merger or acquisition
- D . Separation of functions according to accounting standards
When making the federal payroll tax deposit, the accounting entry to record an advance payment of EIC would be:
- A . Debit EIC payable, credit cash
- B . Debit cash, credit EIC payable
- C . Debit FIT payable, credit cash
- D . Debit EIC payable, credit FICA payable
The FLSA term "exempt" generally means the employer need NOT:
- A . Withhold federal income tax
- B . Pay overtime
- C . Pay federal income tax
- D . Pay a minimum amount
Which of the following would not be included in the system testing stage of an
implementation?
- A . Volume testing
- B . Functional testing
- C . Recruiting tests
- D . Stress testing
Who of the following most likely is an independent contractor?
- A . A repairman who is called periodically to perform maintenance on the PC’s of a dental office.
- B . A person normally employed in the mail room who comes in after hours to clean the offices.
- C . A commissioned salesman who works from his home.
- D . A retiree called back to work on a temporary basis
Which of the following is one of the purposes of a job description?
- A . Illustrates the position in relation to others in the organization
- B . Outlines individual performance goals for next fiscal year
- C . Describes incumbent’s obligations to pay appropriate federal, state, and local taxes while holding the position
- D . Provides implementation plan for conversion to new system
A report has been requested that is NOT a standard report from the system.
This type of report is called a (n):
- A . batch system report
- B . integrated report
- C . edit report
- D . ad-hoc report
Which of the following general ledger accounts is integral to a quarterly deposit reconciliation?
- A . Accrued wages payable
- B . Salary cash
- C . Tax liabilities
- D . Payroll cash
Assuming that the moving expense was incurred in 2009, which of the following expense reimbursements is excludable from gross income?
- A . Travel expenses of spouse to search for new residence at new job location
- B . Mileage for a pre-move house hunting trip
- C . Lodging expenses while waiting for the new home to be built
- D . Mileage while moving from the old residence to the new
When the state does not allow workers’ compensation converge through a private insurance carrier, this is referred to as a:
- A . Public fund state
- B . National council state
- C . Competitive state
- D . Monopolistic state
Bass Biting Company operates bait, tackle and boat sales store employing 12 full time clerks and salespeople in addition to the owner and his family members. Occasionally, Bass Biting assigns special work to individuals other than its regular employees and family members. Employee Lois was a bait and tackle shop clerk until she retired on June 30. Lois returned to the bait and tackle shop to perform clerical duties on August 15 and worked through Labor Day to assist Bass Biting through its busy season. Determine Lois’ employment status with Bass Biting
- A . Statutory nonemployee
- B . Independent contractor
- C . Nonstatutory employee
- D . Employee
What is the total amount reported in box 10, "Dependent care benefits?"
- A . $ 0
- B . $10,480
- C . $5,500
- D . $4,980
Which of the following describes a plan involving the entire organization for carrying on a company’s business in the event of a major disaster?
- A . Groupware
- B . Implementation plan
- C . Production plan
- D . Business continuity
Jane voluntarily separated from employment. She is allowed to continue paying for her medical insurance at cost plus 2% under what legislation?
- A . Fair Labor Standards Act of 1948
- B . Family and Medical Leave Act of 1993
- C . Tax Reform Act of 1986
- D . Consolidated Omnibus Budget Reconciliation Act of 1985
Which of the following best represents compliance under Section 404 of Sarbanes Oxley?
- A . Payroll transactions are reviewed by internal audit
- B . Service provider initiates all pay transactions
- C . Accruals entries are made by the payroll staff
- D . Benefits enrollment data is maintained by authorized personnel
Which of the following agencies would most likely enforce rules governing the number of days following the close of the payroll period that employees must be paid?
- A . State workers’ compensation board
- B . State labor department
- C . Internal Revenue Service
- D . Social Security Administration
In the context of fringe benefits, the term "discriminatory plan" refers to a plan that disproportionately favors:
- A . An ethnic group
- B . An age group
- C . A sex
- D . The highly paid
The proper handling of a stop payment includes all of the following steps EXCEPT:
- A . notifying the bank account reconciliation employees
- B . documenting the reason for the transaction
- C . reversing the direct deposit
- D . cancelling the payment in the payroll system
The entry to record an employee’s repayment of a salary advance is (employee repays advance by personal check):
- A . Debit cash, credit accounts receivable
- B . Debit cash, credit wages payable
- C . Debit salary expense, credit accounts receivable
- D . Debit accounts receivable, credit cash
At the time that wages are paid, an advance payment of EIC would be recorded as:
- A . Debit FIT payable, credit cash
- B . Debit cash, credit EIC payable
- C . Debit EIC payable, credit FICA payable
- D . Debit EIC payable, credit cash
All of the following data elements are required to be maintained in the employee master file
EXCEPT:
- A . birth date
- B . marital status
- C . occupation
- D . social security number
Under NACHA rules, employers are advised to retain a copy of the employee’s written authorization for direct deposit for at least:
- A . 3 years
- B . 2 years
- C . 1 year
- D . 4 years
A company pays all executives semimonthly.
The FLSA requires all other employees to be paid on:
- A . any established cycle
- B . a weekly cycle
- C . a biweekly cycle
- D . a semimonthly cycle
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 employees’ pay stub, if the employee has been paid $25,000 so far this year and had income tax withheld from her most recent wage payment?
- A . at the optional flat rate for all payouts at termination only
- B . using the aggregated method only
- C . at the optional flat rate or using the aggregate method
- D . using the prior 12 months’ tax rate
For purposes of the FLSA, a payroll register must be retained for a period of not less than how many years?
- A . 5
- B . 3
- C . 4
- D . 2
Employee data need not be entered in both the payroll system and the time and attendance system when which of the following is used?
- A . An interface
- B . Open systems
- C . A firewall
- D . A password
The penalty for failure to withhold wages under a federal tax levy notice is:
- A . 75% of the amount not withheld
- B . 100% of the amount not withheld
- C . 150% of the amount not withheld
- D . 50% of the amount not withheld
What is the difference between policy and a procedure?
- A . None, they serve the same purpose
- B . Policies are rules; procedures are instructions
- C . Procedures need to be documented; policies do not
- D . Policies can be overridden; procedures may not
A cross-functional work team is an important element of:
- A . Benchmarking
- B . Management by objective
- C . Business process reengineering
- D . Claim of right
The primary responsibility of Professional Employer Organizations is:
- A . Determining the client’s products and services
- B . Establishing their client’s FEIN
- C . Leasing the buildings and fixtures
- D . Co-employment of their client’s employees
The entry to record an employee’s repayment of a salary advance is (salary advance is deducted on a pretax basis from regular wages):
- A . Debit salary expense, credit accounts receivable
- B . Debit salary expense, credit wages payable
- C . Debit accounts receivable, credit cash
- D . Debit cash, credit salary expense
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?
- A . Withhold income tax as if the total were a single payment for a regular payroll period.
- B . Withhold a flat 25% from the supplemental wages and withhold from regular wages using the appropriate table.
- C . Withhold a flat 25% from the supplemental wages.
- D . Compute income tax withholding on the regular wages separate from the supplemental wages
Assume that an independent contractor is a foreign person.
What form is he most likely to complete?
- A . Form W-9
- B . Form W-8BEN
- C . Form W-4
- D . Form W-7
Which of the following would probably not require an electronic interface from the payroll/human resources system?
- A . Originating bank for direct deposit
- B . 401(k) administrator
- C . External audit firm
- D . Payer of push money
An employer may accept a child support order directly served from another state without risk of liability under which of the following laws?
- A . ERISA
- B . URESA
- C . OCSE
- D . UIFSA
Procedures governing employers’ payment of wages by direct deposit are governed by:
- A . SSA
- B . INS
- C . IRS
- D . NACHA
The proper entry to record the payment of accrued wages is:
- A . Debit cash, credit salary expense
- B . Debit accrued wages, credit cash
- C . Debit cash, credit accrued wages
- D . Debit salary expense, credit accrued wages
Which of the following accounts has a normal debit balance?
- A . Liability
- B . Expense
- C . Revenue
- D . Equity
What is the amount reported in box 12, and what code is used?
- A . C 4,980
- B . D 24,582
- C . C 10,480
- D . D 29,682
Which of the following would not be included in the Needs Analysis stage of a system evaluation?
- A . Review of the current system
- B . Creating a current cost model
- C . Defining the company’s technical direction
- D . System testing
Which of the following is not likely to be included in payroll documentation?
- A . Auditors’ Questionnaire
- B . Proofing and Balancing Payroll
- C . Tax Set Up
- D . Correcting Errors
Which of the following is the most logical order of events in a system implementation?
- A . Training, development, testing evaluation
- B . Feasibility, evaluation, development, testing
- C . Conversation, training, testing, evaluation
- D . Testing, evaluation, training, documentation
Which for the following statements is true?
- A . A company’s fiscal year must not be the same as the calendar year
- B . A company’s fiscal year must be the same as the calendar year
- C . A company may designate its fiscal year to cover 12 months that differ from the calendar year
- D . A company must produce Forms W-2 at the end of its fiscal year regardless of the calendar
With regard to employee’s reported tips, the employer must:
- A . report tips as wages on Form W-2 and pay the employer portions of social security and Medicare taxes
- B . report taxes on tips separately when making an employment tax deposit
- C . report and pay the employer portion of social security and Medicare taxes on the portion of cash tips above the federal minimum wage
- D . withholds and pays only the employees’ portion of social security and Medicare taxes on tips
What is one of the major considerations when evaluating and selecting a software system for payroll?
- A . The sale’s representative’s knowledge of payroll
- B . The arrangement of the panels for on-line data entry
- C . The number of trainers the software has available
- D . The fit of the technical platform with the company’s strategic plans
The rate of withholding in 2009 on qualified pension distributions made directly to
employees is:
- A . 15%
- B . 20%
- C . 27%
- D . 30%
An employee earns $9 per hour and an additional 10 cents per hour for hours worked after 7:00 p.m.
If an employee works from 3:00 p.m. to 11:00 p.m., Monday through Friday, what is the employee’s weekly gross pay under the Fair Labor Standards Act?
- A . $360
- B . $362
- C . $364
- D . $361
The FLSA requires which of the following records to be retained for three years?
- A . Proof of workers’ compensation coverage
- B . Document showing employee’s job duties
- C . Daily time records
- D . Employee disciplinary notices
Employers in non-credit reduction states that pay their state unemployment taxes on time can deduct up to what percentage in calculating their FUTA tax payments?
- A . 0.8%
- B . 6.2%
- C . 5.4%
- D . 4.5%
Sally’s department was scheduled to work from 8:00 a.m. until 5:00 p.m. It was announced to all employees that a severe winter storm was expected to reach the city between 4:00 p.m. and 5:00 p.m. Employees of Sally’s department asked if they, like most other departments, would be allowed to leave work at 3:00 p.m. to avoid being caught in the storm. Sally was sympathetic, but after much discussion denied the request, stating that the policy was clear that employees were to remain on duty until 5:00 p.m.
Which of the following management styles is Sally demonstrating?
- A . Diplomatic
- B . Bureaucratic
- C . Autocratic
- D . Participative
Beth, who works for Nugget Productions, is enrolled in the company’s cafeteria plan. Beth adopts a child in august, and requests a change in her election under the cafeteria plan.
What is the action that may be taken?
- A . The employer will increase Beth’s deduction retroactively to the child’s date of birth
- B . There can be no change to Beth’s deduction until the first quarter
- C . Beth may change her election due to the change in family status
- D . Nugget Products will suspend Beth’s deduction until the first quarter
The employer may classify a worker as an independent contractor if the worker:
- A . Signs a contract
- B . Furnishes his or her own tools and supplies
- C . Fails the common-law test
- D . Is retired or over age 65
Under the claim-of-right rule, a salary overpayment that is discovered by the employer in the tax year following the year of overpayment:
- A . Can be deducted on a pretax basis from regular wages
- B . Cannot be deducted from the employee’s wages because employee has a right to the payment
- C . Can be deducted from wages on an after-tax basis
- D . Cannot be deducted from wages at all
The popular term used to describe traditional theories and perceptions is":
- A . Paradigm
- B . Cognizance
- C . Presumption
- D . Hypothesis
Which of the following would not be included in the planning stage of a system implementation?
- A . Creating a task list
- B . Determining resources needed for the project
- C . Documenting the new software
- D . Defining the project’s goals and objective
Which of the following represents the best way of addressing an issue of an employee’s poor task performance?
- A . Relocating physical work space near the supervisor
- B . Reassignment to another department
- C . Targeting training
- D . Assigning to an autocratic leader
An employer is allowed under deferral law to pay overtime for all hours worked over 80 in a biweekly period.
In what type of industry is this employer likely to be engaged?
- A . Manufacturing
- B . Health care
- C . State or local law enforcement
- D . Retail
Bass Biting Company operates bait, tackle and boat sales store employing 12 full time clerks and salespeople in addition to the owner and his family members. Occasionally, Bass Biting assigns special work to individuals other than its regular employees and family members. Only two employees, George the President, and Earl, a salesperson, receive group-term life insurance. The value of each of their group-term life benefit is $93 per month, and $23 per month after excluding the first $50,000 of coverage.
How much is exempt from wages?
- A . $0
- B . $93.00
- C . $186.00
- D . $46.00
A salaried-exempt executive employee is unable to work for two days in the work week because the office is closed for remodeling. The employee’s weekly guaranteed salary is $500.
Under FLSA what amount must this employee be paid for he work week?
- A . $200
- B . $400
- C . $300
- D . $500
Which of the following accounts has a normal credit balance?
- A . Expense
- B . Asset
- C . Cash
- D . Liability
Employer-sponsored athletic facilities may not be nontaxable fringe benefits if the:
- A . facility qualifies as a de minims fringe
- B . employer incurs no substantial additional cost, except labor, to provide the facility
- C . employer requires substantiation of the amount, time, and business purpose of the facility’s use.
- D . facility is on the employer’s premises
Choose the statement that represents the best implementation of internal control:
- A . Payroll master file changes are reviewed by human resources
- B . Supervisors input increases and new hires to the payroll master file
- C . The bank is instructed to send canceled checks directly to the payroll manager
- D . Payroll computes cost-of-living increases for employees
In a leasing arrangement, which of the following is not assumed by the leasing company?
- A . Payment of employees
- B . Product research
- C . Hiring of employees
- D . Termination of employees
Which of the following is tax-free to all employees even if only provided to highly paid employees?
- A . Cafeteria plans
- B . Athletic facilities
- C . 401(k) plans
- D . Transportation fringe benefits
In 2009, employee Chris was transferred from her company’s headquarters to a distribution center 1,000 miles away. The company reimbursed her for meal expenses totaling $100 and lodging expenses totaling $300 incurred while driving from her old residence to her new. Chris’ company directly paid the moving company $2,000 for transporting her household goods.
What portion of Chris’ employer-paid relocation expenses is reported in box 1, "wages, tips, other compensation?"
- A . $100
- B . $2,400
- C . $2,300
- D . $0
Which of the following is an example of a system edit?
- A . A special panel or screen is used to input corrections
- B . The payroll specialist re-enters an employee’s ZIP code
- C . An on-line message alerts the user that a 401(k)-deduction percent higher than the company allows was entered.
- D . The system has an on-line report writer
The effective minimum hourly rate that tipped employees must receive is which of the following?
- A . No particular rate is required
- B . 100% of the federal minimum wage
- C . 50% of the federal minimum wage
- D . 20% of the federal minimum wage
Which of the following benefits is allowable in an 125 plan?
- A . Disability insurance
- B . Educational assistance
- C . 403(b)
- D . Transportation fringe benefits
The employer must withhold FICA and federal income taxes, and pay FUTA tax, when the employee’s tips exceed what amount?
- A . $50 per month
- B . $50 per year
- C . $20 per month
- D . $20 per year
Which of the following is important when planning a problem-solving meeting?
- A . Determine the detailed solution you expect to hear from the participants
- B . Begin with an overview of good time management
- C . Prepare an agenda and distribute prior to the meeting
- D . Invite the participants who will agree with your position
Which of the following factors provides system security?
- A . access level authorizations
- B . conducting "physical payouts"
- C . shared passwords
- D . segregation of duties
If an employee working abroad with a tax home in a foreign country passes the "physical presence test," to what may the employee be eligible?
- A . Foreign service premium
- B . Employer-paid housing expenses
- C . Hardship allowance
- D . Income exclusions
Which of the following items determines the disposition of unclaimed wages?
- A . federal law only
- B . federal and state law
- C . no recognized procedures exist
- D . state law only
A payroll department manager should assure:
- A . appropriate training and equipment resources for staff members
- B . an independent mission statement
- C . top payment of staff
- D . immediate enactment of employee suggestions
A company has a gross payroll of $120,589.36. Federal taxes withheld are $24,117.87; combined social security and Medicare taxes withheld are $6,502.50.
What is the company’s total tax liability for this pay period?
- A . $37,122.87
- B . $30.620.37
- C . $42,568.04
- D . $61,240.74
Transactions are recorded in chronological order into books of original entry called:
- A . registers
- B . journals
- C . vouchers
- D . invoices
An employer that pays its state unemployment contributions after the due date of the Form 940 has its FUTA credit reduced by what percentage?
- A . 90.0%
- B . 5.4%
- C . 10.0%
- D . 6.2%
Company deadlines for payroll data input documents are essential for:
- A . timely processing of the payroll
- B . guaranteeing that all information is processed
- C . accurate entry of data
- D . adequate auditing purposes
Flawless Flower Shops accepts payments for flowers and local delivery from customers anywhere in the United States. The employees of Flawless typically work 6 days a week.
How must they be compensated?
- A . Overtime must be paid on a daily basis
- B . Compensatory pay is allowed for hours over 80 in a biweekly pay period
- C . Overtime is due for hours worked over 40 in a workweek
- D . Double time is required for work on holidays
Portability describes the attribute of software to:
- A . Print output in duplex
- B . Use telephone lines to communicate between physical locations
- C . Use video and audio
- D . Execute on other platforms without application code modifications
How many hours prior to payday is it recommended that a direct deposit of wages be initiated with the ODFI?
- A . 8 hours
- B . 48 hours
- C . 24 hours
- D . 72 hours
Which of the following employees’ wages is likely to be exempt from FICA?
- A . A parent working for a child
- B . A spouse working for a spouse
- C . A statutory employee
- D . A child under age 18 employed by a parent
For 2009, the mandatory rate of federal income tax withholding on supplemental wages in excess of $1 million is:
- A . 25%
- B . 35%
- C . 20%
- D . 28%
Which of the following would never be delegated to a manger’s subordinates?
- A . Accountability
- B . Responsibility
- C . Authority
- D . All of the above
Which of the following generally does NOT represent compensable time under the FLSA?
- A . Time sent in break room waiting for job instructions
- B . Time spent cleaning up work area after normal shift
- C . Overtime hours not authorized by the employer
- D . Travel to a convention after normal working hours
Which of the following statements is CORRECT regarding a federal tax levy?
- A . It does not have to be honored if any other garnishments have been served.
- B . It is limited only by the amount of the employee’s net pay
- C . It is continued each pay period until a release of levy is received.
- D . It requires a new order for each pay period.
On what form must mistakenly paid wages, for which no repayment is made, be reported?
- A . 1099-R
- B . W-2
- C . W-4
- D . 1099-MISC