1 Answered Test Questions:
1. A company must send W2 forms every year to its employees by _____________.
Answers:
• January 31
• February 28
• June 30
• September 30
76 NOT Answered Yet Test Questions:
(hold on, will be updated soon)2. The term "guaranteed wage" refers to ______________.
Answers:
• regular per-hour wages
• overtime pay beyond 60 hours per week
• a payroll deduction
• an agreement to pay an employee a set amount, regardless of hours worked
3. The term "escheat law" refers to ____________.
Answers:
• a law that states employees must be paid twice per month
• a law that requires employers to hold un-cashed payroll checks for a certain amount of time
• A law that states employees cannot be over the age of 65
• A law that states employees can be given raises only once per year
4. Which of the following journal entries would be made to void a payroll check printed in error?
Answers:
• Dr: Salary Payable, Cr: Salary Expense
• Dr: Salary Expense, Cr: Cash
• Dr: Cash, Cr: Salary Payable
• Dr: Cash, Cr: Salary Expense
5. What is Form W3?
Answers:
• A detailed version of Form W2
• An annual tax filing form for private corporations
• A form filed with the Social Security Administration summarizing all employee W2s
• The same as Form 941
6. The Fair Labor Standards Act of 1938 __________________.
Answers:
• established equal employment laws for women and children
• abolished slave labor
• Set standard wages for hours worked
• Set the minimum wage at $8 per hour
7. Which of the following is a major payroll processor?
Answers:
• ADP
• IRS
• FASB
• SEC
8. The term "incentive payment plan" refers to _______________.
Answers:
• regular wage payments
• a compensation plan based on company performance
• another name for termination pay
• a compensation plan in which employees earn more when they reach certain goals
9. The term "cumulative method of withholding" refers to ______________.
Answers:
• the calculation of minimum wage rates
• a federal income tax withholding method that applies a formula with both fixed and variable components to the wage amounts
• a federal income tax withholding method that takes into account gross earnings, payroll period, marital status, and number of withholding allowances
• A federal income tax withholding method in which the current withholding amount is determined by cumulative wages and the amount that has already been withheld
10. A company must file Form W3 every year by _____________.
Answers:
• January 31
• September 30
• February 28
• December 31
11. The term "statutory employee" refers to ______________.
Answers:
• another name for an independent contractor
• a regular, full-time employee subject to tax withholdings
• a part-time employee
• the president of a company
12. The term "payroll period" refers to ____________.
Answers:
• a calendar year
• one month
• the frequency of employee compensation
• two weeks
13. On which of the following financial statements is Payroll Expense reported?
Answers:
• Statement of Retained Earnings
• Income Statement
• Balance Sheet
• Cash Flow Statement
14. What is an EIN?
Answers:
• Employee Identification Name
• Employer Identification Number
• Every Independent Numerator
• Employer Identification Name
15. What is the purpose of a time card?
Answers:
• To track employee hours worked per payroll period
• To calculate employee tax withholding
• To calculate bonuses
• To determine employee tax exemptions
16. What is the purpose of Form 940?
Answers:
• To report annual wages to employees
• To report annual wages to the IRS
• To reconcile taxes paid with tax liability for unemployment taxes
• To reconcile taxes paid with tax liability for federal taxes
17. The term "withholding allowance" refers to ______________.
Answers:
• the extra amount held for the employee in a savings account
• the additional tax obligation of the employee
• the additional tax obligation of the employer
• an allowance that reduces taxable income by a fixed amount
18. For an employee, which of the following is a benefit of using direct deposit?
Answers:
• Eliminates the need for the employee to reconcile bank accounts
• Allows employee to commit fraud more easily
• No direct benefit to employee
• Eliminates the need for the employee to go to the bank to deposit a check, since pay is deposited directly in the bank, often the day before payday
19. For an employer, which of the following is a disadvantage of using direct deposit?
Answers:
• Builds goodwill with employees
• Immediately reduces available cash because everyone is paid on payday without having to wait for checks to clear
• Increases employee opportunity for fraud
• Saves the company time and money
20. The term "wage bracket method for withholding taxes" refers to ______________.
Answers:
• a program used to process payroll
• a company's policy on wage rates
• minimum wage rates
• a federal income tax withholding method that takes into account gross earnings, payroll period, marital status, and number of withholding allowances
21. Payroll system software can be hosted _____________.
Answers:
• online
• on a remote computer
• on a local computer
• All of the above
22. What is the purpose of auditing payroll ?
Answers:
• To fulfill an IRS requirement
• To fulfill a GAAP requirement
• To identify employees who deserve a raise
• To verify that payroll records are accurate and to reflect what happened
23. The term "direct deposit" refers to ______________.
Answers:
• writing a check for payroll
• entering an employee's time into the payroll system
• placing funds directly in an employee's bank account without issuing a paycheck
• depositing accounts receivable checks into the bank
24. At ABC School, the current salary schedule for custodians is as follows:
Step 1: $12.47
Step 2: $13.09
Step 3: $13.75
Step 4: $14.44
Step 5: $15.16
Employees are moved to the next step on the salary schedule annually. Wages for the year have increased 2.25% from the previous school year. Employee C was paid on Step 2 for the previous school year.
Given the above schedule, what is Employee C's pay rate for the current school year?
Answers:
• $15.04
• $16.07
• $12.02
• $14.06
25. Which of the following age groups is covered by the Age Discrimination in Employment Act of 1967?
Answers:
• Up to age 20
• Ages 20 to 25
• Over 40
• Over 80
26. Which of the following accounts is debited when FUTA taxes are paid to the government?
Answers:
• FUTA Expense
• FUTA Payable
• Wages Payable
• Wages Expense
27. The term "overtime" refers to ______________.
Answers:
• hours worked each week beyond 27.5
• hours worked each week beyond 55
• hours worked each week beyond 80
• hours worked each week beyond 40
28. Which of the following factors might prompt a company to switch to an automated payroll system?
Answers:
• Income tax rates
• Number of employees being paid
• Annual raises are coming up
• Payroll staff has increased
29. The term "taxable wages" refers to ______________.
Answers:
• all wages earned regardless of amount
• the maximum calendar year gross wages that are subject to a particular tax
• commission-based wages only
• regular wages only
30. The Circular E: Employer's Tax Guide is ______________.
Answers:
• an IRS publication that describes withholding methods
• an SEC report for public companies
• another name for an employee handbook
• a taxation form for unemployment
31. The term "payroll register" refers to ______________.
Answers:
• a weekly report sent to employees detailing the hours they worked
• a financial statement
• a time card
• a payroll record for a payroll period listing all employees, gross wages, deductions, and net pay
32. The term "bonus" refers to ______________.
Answers:
• termination pay
• a sum of money given to an employee in addition to the employee's regular compensation
• severance pay
• regular pay for 40 hours per week
33. The term "unemployment compensation benefits" refers to ______________.
Answers:
• payments under state programs made for a limited time to unemployed workers
• payments under a federal program to unemployed workers
• insurance an employee must take out privately
• payments to employees who have suffered accidents on the job
34. The term "self-employment income" refers to ______________.
Answers:
• income earned working for another
• income earned by an individual from a business operated as a sole proprietorship
• income earned while working out of the country
• income earned above $100,000
35. What is the purpose of Form W2?
Answers:
• To report annual wages to employees
• To report annual wages to the IRS
• To report to employees their total wages earned and taxes paid
• To reconcile, on a quarterly basis, taxes paid with tax liability for federal taxes
36. Which of the following is a benefit of an automated payroll system?
Answers:
• More economical than processing payroll within the company
• Ability to fire some of the payroll staff since the function now requires less labor
• Fewer internal controls are needed
• Allows a company to process payroll more quickly
37. According to the Self-Employment Contributions Act, any enterprise ___________________ is considered a business.
Answers:
• that hires at least 10 people
• that pays federal taxes
• that makes over $100,000 per year
• in which activities are carried out for the purpose of earning a living
38. What is the purpose of an EIN?
Answers:
• Same as a stock ticker symbol
• Used to report employee earnings
• Distinguishes public companies from private companies
• An identifier for the IRS to track employers
39. How often should payroll be reconciled?
Answers:
• Hourly
• Once per payroll period
• Weekly
• Annually
40. Who decides if a person is an employee or an independent contractor?
Answers:
• SEC
• IRS
• Employer
• Employee
41. Which of the following payroll items is worth auditing?
Answers:
• The middle names of employees
• The addresses of employees
• That gross pay for each individual matches his or her employment agreement
• The prior employers of employees
42. The term "piece rate plan" refers to ______________.
Answers:
• a compensation plan in which the employee earns a percentage of sales
• a compensation plan in which employees are paid based on units produced
• termination pay
• an agreement to pay an employee a set amount, regardless of hours worked
43. What does the acronym SUTA stand for?
Answers:
• Special Unemployment Tax Act
• State Unemployment Taxation Analysis
• Special Unemployment Taxation Analysis
• State Unemployment Tax Act
44. The term "percentage method of withholding" refers to ______________.
Answers:
• the amount of unemployment tax to be withheld
• a federal income tax withholding method that applies a formula with both fixed and variable components to the wage amounts
• minimum wage rates
• a federal income tax withholding method that takes into account gross earnings, payroll period, marital status, and number of withholding allowances
45. The term "contribution report" refers to ______________.
Answers:
• an annual report sent to employees listing how much they made per month
• a quarterly state unemployment tax return that applies an experience rating percentage to gross wages to compute the quarterly tax
• an annual report sent to the IRS on behalf of the employee
• an internal document given to employees each payroll period
46. The term "bona fide occupational qualification" refers to _______________.
Answers:
• the Equal Pay Act
• a qualification that allows an employer to hire based on race, religion, or gender
• a qualification that forces employers to hire based on race, religion, or gender
• a qualification that does not allow an employer to hire based on race, religion, or gender
47. Who issues an EIN to a company?
Answers:
• FASB
• IRS
• Federal government
• State government
48. Who controls the regulations for the timing of payment of wages?
Answers:
• Federal government
• State government
• City government
• Municipal government
49. Are meals provided on the company's premises subject to employment taxes as a benefit?
Answers:
• Yes
• No
• Depends on employee job
• Depends on state
50. The Equal Pay Act ____________________.
Answers:
• outlawed the practice of paying people different amounts based on gender
• states that all employees must be paid the same rate for the same position
• states that all companies must pay their executives the same amount
• states that all underage children must be paid less than the minimum wage
51. How are FUTA taxes recorded at the time of payroll?
Answers:
• As revenue
• As a liability
• As an asset
• As equity
52. Which of the following is a disadvantage of an automated payroll system?
Answers:
• Less accurate tax reporting
• More costly than manually preparing payroll
• Employees will be laid off since the automated system requires less labor
• Employees need a degree in accounting to be able to process payroll
53. Which of the following illustrates the basic Balance Sheet formula?
Answers:
• Assets + Liabilities = Equity
• Assets + Equity = Liabilities
• Equity - Liabilities = Assets
• Assets = Liabilities + Equity
54. The term "employee earnings record" refers to ______________.
Answers:
• a payroll record for each employee listing the gross wages, deductions, net pay, and cumulative earnings
• a record sent to the IRS at year end detailing an employee's earnings
• a weekly report sent to employees with their paychecks
• an IRS-issued report mailed to employees' homes
55. The term "commission plan" refers to ______________.
Answers:
• a compensation plan in which the employee earns a percentage of sales.
• a compensation plan in which employees are paid based on units produced
• termination pay
• an agreement to pay an employee a set amount, regardless of hours worked
56. Which of the following is an example of an internal control for payroll?
Answers:
• Giving employees cash instead of checks
• Having the company CFO review all financial reports
• Putting employee pay stubs and/or checks in sealed envelopes
• Paying employees for the hours they report without review
57. The term "disability insurance" refers to ______________.
Answers:
• insurance paid by employers to cover on-the-job accidents only
• insurance paid by employers and employees for protection of the employees against loss of wages due to non-job-related accidents
• private insurance employees must take out when starting a new job
• municipal-issued insurance
58. The term "oppressive child labor" refers to ____________.
Answers:
• the policy of not hiring willing child employees
• hiring children from other countries
• the employment of any child under the age of sixteen
• paying a child for more than 40 hours a week
59. A W4 is ____________.
Answers:
• a tax return form
• a form used to claim allowances for the purpose of requesting the withholding of an additional amount or of claiming an exempt status
• a form independent contractors must file with the employer
• the same as Form 941
60. The term "profit sharing" refers to ______________.
Answers:
• termination pay
• extra compensation paid for services over and above those normally performed
• extra compensation paid to employees based on the profits of the company
• regular pay for 40 hours per week
61. The term "audit trail" refers to ______________.
Answers:
• evidence of a sequence of transactions that allows anyone to trace a transaction back through the accounting system
• a written ledger of all checks written
• the paperwork auditors will request during the annual audit
• a report auditors provide post-audit
62. Of the following, which is the best safeguard against employees accessing the payroll system?
Answers:
• Don't allow employees to use the computer
• Create password-protected payroll system user accounts
• Make employees sign a form saying they won't violate company rules
• Allow access to the payroll system only to the CEO
63. The term "workers compensation insurance" refers to ______________.
Answers:
• insurance paid for by employees to cover them in the event they lose their job due to an off-the-job accident
• insurance paid for by the employees to cover them in the event they lose their job due to bad performance
• government-issued health insurance
• insurance paid for by employers that provides benefits to employees or their families for loss of wages due to job-related accidents, illness, or injuries
64. "Regular earnings" are considered earnings for how many hours of work?
Answers:
• 55 per week
• 40 per week
• 27.5 per week
• 80 per week
65. On which of the following financial statements is Revenue reported?
Answers:
• Balance Sheet
• Income Statement
• Cash Flow Statement
• Payroll Register
66. The term "the accounting process" refers to ______________.
Answers:
• the sequence of steps in accounting from transaction to financial report
• the creation of financial reports
• the internal controls set by Payroll
• the interval between payroll checks
67. What is the purpose of accruing vacation expense?
Answers:
• To record vacation expense in the period earned
• To build a savings account for vacations
• To allow employers to pay employees for vacation time
• To gain better tax write-offs
68. Employee B has an annual salary of $50,000 that is paid to him over 26 pay periods. He works 260 days per year. He retires after working 65 days, during which time he received 6 paychecks.
Given this information, Employee B's gross wages for his final paycheck will be _____________.
Answers:
• $961.52
• $1,203.42
• $879.32
• $343.54
69. What is the purpose of Form 941?
Answers:
• To report annual wages to employees
• To report annual wages to the IRS
• To reconcile taxes paid with tax liability for unemployment taxes
• To reconcile, on a quarterly basis, taxes paid with tax liability for federal taxes
70. The term "internal control" refers to ______________.
Answers:
• a safe where petty cash is kept
• a measure by which a company safeguards its accounting data
• allowing employees access to the company credit card
• a practice prohibited by the IRS
71. Which of the following should happen in the payroll system after an employee is terminated?
Answers:
• The employee should be given a one-time bonus.
• The employee's hourly rate should be set to $99.
• The employee's former employers should be contacted and notes made.
• The employee should be flagged as terminated in the payroll system.
72. Why has the IRS allowed employers to combine federal taxes when computing withholding amounts?
Answers:
• The rates are all the same.
• Payroll software cannot accommodate different rates.
• There is no stated reason.
• To make computing taxes easier for employers
73. A company that employs ______________ is subject to the Civil Rights Act of 1964.
Answers:
• at least 15 workers for 20 weeks per year
• at least 100 workers
• at least 1 worker who works 40 hours a week
• at least 12 workers for 45 weeks per year
74. For an employer, which of the following is a benefit of using direct deposit?
Answers:
• Gets cash out of the company bank account faster
• Less costly than printing and signing checks
• Prevents employee fraud
• No direct benefit
75. The term "earned income credit" refers to ______________.
Answers:
• a special credit for people who make over a certain amount
• a credit given to people in the form of a monthly check
• a direct reduction in taxes for employees with incomes below a stipulated level
• a credit given to people who are unemployed
76. Employee C wants to contribute $8,000 a year to his tax shelter annuity. The district allows payroll deductions for tax shelter annuities to be spread over 18 pay periods. How much will have to be deducted each pay period so that Employee C contributes the $8,000?
Answers:
• $535.43
• $644.34
• $444.44
• $464.66
77. Which of the following statements about independent contractors is true?
Answers:
• An independent contractor determines when, where, and how he or she will work under a contract.
• An independent contractor files a Form W2 like any other employee.
• Federal taxes are withheld for independent contractors.
• Independent contractors work part-time.
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