CPP Practice Exam 4
This is a practice quiz to help you prepare for the Certified Payroll Professional certification. The quiz is based on a bank of 25 multiple choice questions that reveal the correct answer before you move on to the next question. The questions and their associated answers are randomized every time you take the quiz to avoid pattern development. Questions requiring calculations that change from year to year have been omitted. Good luck as you pursue this goal. I hope this helps you prepare. Inspired by my lovely wife as she pursued this goal as Read morewell.
- 1.
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.
Beth may change her election due to the change in family status
- C.
Nugget Products will suspend Beth's deduction until the first quarter
- D.
There can be no change to Beth's deduction until the first quarter
Correct Answer
B. Beth may change her election due to the change in family statusExplanation
Beth is enrolled in the company's cafeteria plan and she adopts a child. The change in family status, specifically the adoption of a child, allows Beth to request a change in her election under the cafeteria plan. Therefore, Beth may change her election due to the change in family status.Rate this question:
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- 2.
Which of the following best represents compliance under Section 404 of Sarbanes Oxley?
- A.
Accruals entries are made by the payroll staff
- B.
Payroll transactions are reviewed by internal audit
- C.
Service provider initiates all pay transactions
- D.
Benefits enrollment data is maintained by authorized personnel
Correct Answer
B. Payroll transactions are reviewed by internal auditExplanation
Compliance under Section 404 of Sarbanes Oxley requires that a company's internal controls over financial reporting are tested and evaluated by an independent auditor. This includes reviewing and validating payroll transactions by the internal audit department to ensure accuracy and prevent fraud or errors.Rate this question:
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- 3.
Employee's regular monthly salary is $950. Employee is scheduled to work 37 hours per week. Under the FLSA, how much would this employee be paid for each hour in excess of 37 but less than 40 in the workweek?
- A.
$0
- B.
$5.48
- C.
$6.42
- D.
$5.93
Correct Answer
A. $0Explanation
This employee would not be paid any additional amount for each hour in excess of 37 but less than 40 in the workweek. This is because the question does not mention any overtime pay or any other additional compensation for working beyond the regular scheduled hours. Therefore, the correct answer is $0.Rate this question:
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- 4.
Which of the following would NOT be correct in the treatment of deceased workers' wages, assuming the wages are paid in the year after the workers' death?
- A.
Payment is exempt from FITW
- B.
Report payment in box1 of Form W-2
- C.
Payment is exempt frm FICA and FITW
- D.
Report payment in box 3 of Form 1099
Correct Answer
B. Report payment in box1 of Form W-2Explanation
The correct answer is to report the payment in box 1 of Form W-2. This is because box 1 of Form W-2 is used to report wages, tips, and other compensation that are subject to federal income tax withholding (FITW). Since the question states that the payment is exempt from FITW, it would not be correct to report it in box 1 of Form W-2. Instead, it should be reported in a different box or form that is appropriate for exempt payments.Rate this question:
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- 5.
Which of the following steps would be taken first when selecting a new payroll system?
- A.
Release requests for proposal (RFP's)
- B.
Schedule product demonstrations
- C.
Prepare a needs analysis
- D.
Talk to users of the systems being considered
Correct Answer
C. Prepare a needs analysisExplanation
Preparing a needs analysis would be the first step when selecting a new payroll system. This involves assessing the current payroll system, identifying the requirements and objectives of the new system, and determining the specific needs of the organization. By conducting a needs analysis, the organization can better understand what functionalities and features are necessary in a new payroll system, which will then inform the subsequent steps such as releasing requests for proposal (RFPs), scheduling product demonstrations, and talking to users of the systems being considered.Rate this question:
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- 6.
Procedures governing employers' payment of wages by direct deposit are governed by:
- A.
IRS
- B.
NACHA
- C.
SSA
- D.
INS
Correct Answer
B. NACHAExplanation
NACHA, the National Automated Clearing House Association, governs procedures regarding employers' payment of wages by direct deposit. NACHA is responsible for establishing and maintaining the rules and regulations for the ACH (Automated Clearing House) network, which is used by employers to electronically transfer funds to their employees' bank accounts. NACHA ensures the security and efficiency of these transactions, as well as compliance with relevant laws and regulations.Rate this question:
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- 7.
Under the Immigration Reform and Control Act, employers and employees are required to complete which fo the following forms:
- A.
SS-5
- B.
W-4
- C.
I-9
- D.
SS-4
Correct Answer
C. I-9Explanation
The correct answer is I-9. The Immigration Reform and Control Act mandates that employers and employees must complete the I-9 form. This form is used to verify the identity and employment eligibility of individuals hired for employment in the United States. It requires employees to provide documentation such as a passport or driver's license and a social security card or birth certificate. Employers must carefully review and verify the information provided by the employee on the form to ensure compliance with immigration laws.Rate this question:
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- 8.
Which of the following is important when planning a problem-solving meeting?
- A.
Prepare an agenda and distribute prior to the meeting
- B.
Determine the detailed solution you expect to hear from the participants
- C.
Begin with an overview of good time management
- D.
Invite the participants who will agree with your position
Correct Answer
A. Prepare an agenda and distribute prior to the meetingExplanation
Preparing an agenda and distributing it prior to the meeting is important when planning a problem-solving meeting because it helps to ensure that all participants are aware of the topics that will be discussed and can come prepared with any necessary information or materials. It also helps to keep the meeting focused and on track, ensuring that all relevant issues are addressed and that the meeting stays within the allotted time frame. By providing the agenda ahead of time, participants can also have the opportunity to suggest any additional topics or items that they feel should be included.Rate this question:
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- 9.
Assuming that the moving expense was incurred in 2009, which of the following expense reimbursements is excludable from gross income?
- A.
Mileage for a pre-move househunting trip
- B.
Lodging expenses while waiting for the new home to be built
- C.
Mileage while moving from the old residence to the new
- D.
Travel expenses of spouse to search for new residence at new job location
Correct Answer
C. Mileage while moving from the old residence to the newExplanation
The correct answer is mileage while moving from the old residence to the new. This expense reimbursement is excludable from gross income because it is directly related to the moving process and meets the requirements for exclusion under the tax code.Rate this question:
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- 10.
In the first monthly accounting period of a company's fiscal year, which of the following occurs?
- A.
All liability accounts are reset to zero balances
- B.
Unrepaid debts are "forgiven"
- C.
Asset account balances are reclassified
- D.
Asset and liability accounts reflect prior year ending balance
Correct Answer
D. Asset and liability accounts reflect prior year ending balanceExplanation
In the first monthly accounting period of a company's fiscal year, the asset and liability accounts reflect the prior year's ending balance. This means that the balances of these accounts are carried forward from the previous year and are not reset to zero. This allows for the continuity of financial information and ensures that the company starts the new fiscal year with accurate records of its assets and liabilities.Rate this question:
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- 11.
Assume that an independent contractor is a foreign person. What form is he most likely to complete?
- A.
Form W-7
- B.
Form W-4
- C.
Form W-8BEN
- D.
Form W-9
Correct Answer
C. Form W-8BENExplanation
The independent contractor being a foreign person suggests that they are not a U.S. citizen or resident alien. In this case, the contractor would most likely complete Form W-8BEN, which is used by non-U.S. individuals to claim foreign status and certify their eligibility for treaty benefits. Form W-7 is used by individuals to apply for an Individual Taxpayer Identification Number (ITIN). Form W-4 is completed by employees to indicate their withholding preferences, and Form W-9 is used to provide a taxpayer identification number to a requester.Rate this question:
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- 12.
The popular term used to describe traditional theories and preceptions is"
- A.
Presumption
- B.
Paradigm
- C.
Cognizance
- D.
Hypothesis
Correct Answer
B. ParadigmExplanation
The term used to describe traditional theories and perceptions is "paradigm". A paradigm refers to a set of beliefs, assumptions, and concepts that shape the way people think and understand the world around them. It represents a framework or model that guides scientific or intellectual inquiry. In this context, paradigm is the most suitable term to describe traditional theories and perceptions.Rate this question:
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- 13.
The correct entry to record a payment of th employer's share of FICA tax is:
- A.
Debit payroll tax expense, credit cash
- B.
Debit salary expense, credit tax withheld
- C.
Debit cash, credit payroll tax expense
- D.
Debit tax withheld, credit salary expense
Correct Answer
A. Debit payroll tax expense, credit cashExplanation
The correct entry to record a payment of the employer's share of FICA tax is to debit the payroll tax expense and credit cash. This entry reflects the expense incurred by the employer for FICA taxes and the corresponding decrease in cash due to the payment made.Rate this question:
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- 14.
In keeping with internal control best practices, which of the following would probably not be included in the job description of a payroll specialist?
- A.
Preparing requisition for remitting child support deductions
- B.
Entering employee tax jurisdiction information from Form W-4
- C.
Verifying proper authorization appears on change documents
- D.
Reconciling payroll bank account
Correct Answer
D. Reconciling payroll bank accountExplanation
The task of reconciling the payroll bank account is typically not included in the job description of a payroll specialist. This task is usually performed by a separate accounting or finance department to ensure proper financial controls and separation of duties. The job description of a payroll specialist typically focuses on tasks directly related to processing payroll, such as preparing requisitions for deductions, entering employee tax information, and verifying authorization on change documents.Rate this question:
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- 15.
Which of the following would not be included in the planning stage of a system implementation?
- A.
Determining resources needed for the project
- B.
Creating a task list
- C.
Defining the project's goals and objectives
- D.
Documenting the new software
Correct Answer
D. Documenting the new softwareExplanation
Documenting the new software would not be included in the planning stage of a system implementation because documenting the new software is typically done after the planning stage. In the planning stage, the focus is on determining the resources needed for the project, creating a task list, and defining the project's goals and objectives. Documenting the new software would come later in the implementation process, once the planning stage is complete.Rate this question:
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- 16.
Which of the following represents the best way of addressing an issue of an employee's poor task performance?
- A.
Reassignment to another department
- B.
Targeting training
- C.
Relocating physical work space near the supervisor
- D.
Assigning to an autocratic leader
Correct Answer
B. Targeting trainingExplanation
Targeting training is the best way of addressing an employee's poor task performance because it focuses on improving the employee's skills and knowledge related to their job responsibilities. By providing targeted training, the employee can acquire the necessary skills and knowledge to perform their tasks effectively, leading to improved performance. Reassigning to another department, relocating physical work space near the supervisor, or assigning to an autocratic leader may not directly address the issue of poor task performance and may not result in the employee acquiring the necessary skills and knowledge to improve their performance.Rate this question:
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- 17.
The form used to report wages paid to nonresident aliens that are exempt from federal income tax under a treaty is:
- A.
W-2
- B.
W-8BEN
- C.
5500
- D.
1042-S
Correct Answer
D. 1042-SExplanation
The correct answer is 1042-S. The 1042-S form is used to report wages paid to nonresident aliens who are exempt from federal income tax under a treaty. This form is specifically designed for reporting income that is subject to withholding under Internal Revenue Code Section 1441. It is important to use the correct form to accurately report and document the wages paid to nonresident aliens who qualify for tax exemption under a treaty.Rate this question:
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- 18.
In the context of fringe benefits, the term "discriminatory plan" refers to a plan that disproportionately favors:
- A.
A sex
- B.
An ethnic group
- C.
The highly paid
- D.
An age group
Correct Answer
C. The highly paidExplanation
A discriminatory plan in the context of fringe benefits refers to a plan that disproportionately favors the highly paid employees. This means that the benefits provided by the plan are biased towards those employees who earn higher salaries or wages. This can create inequality within the organization, as it may exclude or provide fewer benefits to lower-paid employees. Discriminatory plans can lead to dissatisfaction and demotivation among the lower-paid employees, who may feel undervalued and unfairly treated compared to their higher-paid counterparts.Rate this question:
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- 19.
An employer is allowed under deferal 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.
State or local law enforcement
- B.
Health care
- C.
Manufacturing
- D.
Retail
Correct Answer
B. Health careExplanation
This employer is likely to be engaged in the health care industry because it is common for employees in this industry to work long hours and potentially exceed the standard 40-hour workweek. Overtime pay for hours worked over 80 in a biweekly period suggests that the employer is aware of and compliant with the specific regulations and requirements for overtime in the health care sector.Rate this question:
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- 20.
Choose the statement that represents the best implementation of internal control:
- A.
Payroll computes cost-of-living increases for employees
- B.
The bank is instructed to send canceled checks directly to the payroll manager
- C.
Supervisors input increases and new hires to the payroll master file
- D.
Payroll master file changes are reviewed by human resources
Correct Answer
D. Payroll master file changes are reviewed by human resourcesExplanation
The best implementation of internal control is to have payroll master file changes reviewed by human resources. This ensures that any changes made to the payroll master file, such as increases or new hires, are properly authorized and accurate. Having human resources review these changes helps to prevent any potential errors or fraudulent activity in the payroll system.Rate this question:
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- 21.
Which of the following is a technique for positive motivation?
- A.
Acknowledging a team member is failing at the regular team meeting
- B.
Posting defects and the perpetrator's name as an example to others
- C.
Rewarding team members for their collective successes
- D.
Terminating a team member at the first delayed deliverable
Correct Answer
C. Rewarding team members for their collective successesExplanation
Rewarding team members for their collective successes is a technique for positive motivation because it acknowledges and reinforces the achievements and contributions of the entire team. By providing rewards, such as bonuses, recognition, or incentives, team members are encouraged to continue working together towards common goals and to strive for excellence. This technique fosters a positive and supportive team culture, boosting morale and motivation among team members. It also promotes a sense of unity and collaboration, leading to increased productivity and overall success.Rate this question:
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- 22.
The employer may classify a worker as an independent contractor if the worker:
- A.
Signs a contract
- B.
Is retired or over age 65
- C.
Fails the common-law test
- D.
Furnishes his or her own tools and supplies
Correct Answer
C. Fails the common-law testExplanation
The common-law test is used to determine whether a worker is an employee or an independent contractor. If a worker fails the common-law test, it means that they do not meet the criteria to be classified as an independent contractor. This could be because they do not have control over their work, they are economically dependent on the employer, or they do not have the opportunity for profit or loss. Therefore, if a worker fails the common-law test, the employer may classify them as an employee instead of an independent contractor.Rate this question:
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- 23.
Another term for service bureaus is:
- A.
Preprocessor
- B.
Prototype
- C.
Business process outsourcer
- D.
Microprocessor
Correct Answer
C. Business process outsourcerExplanation
Service bureaus and business process outsourcers are both terms used to describe companies that provide services to other businesses. These services can include tasks such as data entry, payroll processing, customer service, and other administrative functions. Both terms refer to the outsourcing of specific business processes to external companies, allowing the client company to focus on its core competencies. Therefore, the correct answer is "Business process outsourcer."Rate this question:
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- 24.
Which of the following would never be delegated to a manger's subordinates?
- A.
Responsibility
- B.
Accountability
- C.
Authority
- D.
All of the above
Correct Answer
B. AccountabilityExplanation
Accountability is a crucial aspect of management that cannot be delegated to subordinates. It is the obligation of a manager to take responsibility for the actions and decisions made by their team. Delegating accountability would undermine the manager's role as the one ultimately responsible for the outcomes and performance of the team. Therefore, accountability should always remain with the manager and cannot be delegated to subordinates.Rate this question:
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- 25.
The financial statement that is used to evaluate the performance of a business by matching its revenue and related expenses for a particular accounting period is a:
- A.
Trial balance
- B.
General ledger
- C.
Balance sheet
- D.
Income statement
Correct Answer
D. Income statementExplanation
The income statement is the correct answer because it is the financial statement that evaluates the performance of a business by matching its revenue and related expenses for a specific accounting period. It provides a summary of the company's revenues, expenses, gains, and losses, allowing stakeholders to assess the profitability and financial health of the business. The income statement is also known as the profit and loss statement or statement of earnings.Rate this question:
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Mar 21, 2023Quiz Edited by
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Aug 16, 2011Quiz Created by
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