CPP Practice Exam 8
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.
Which of the following would most likely be a key step in reconcilling a payroll witholding account?
- A.
Set a schedule for paying taxes withheld
- B.
Identify which payees (tax agencies) have unpaid or overpaid tax amounts and how much for each
- C.
Periodically reviewing the deposit lookback period
- D.
Perform a "reasonable test" to confirm liability is within an acceptable range compared to same time last month
Correct Answer
B. Identify which payees (tax agencies) have unpaid or overpaid tax amounts and how much for eachExplanation
To reconcile a payroll withholding account, it is important to identify which payees (tax agencies) have unpaid or overpaid tax amounts and determine the exact amount for each. This step allows for the identification and resolution of any discrepancies or errors in the tax payments made. By comparing the amounts owed or overpaid to the records and ensuring they match, the payroll withholding account can be accurately reconciled.Rate this question:
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- 2.
Jane voluntarily separated from employment. She is allowed to continue paying for her medical insurance at cost plust 2% under what legislation?
- A.
Fair Labor Standards Act of 1948
- B.
Tax Reform Act of 1986
- C.
Consolidated Omnibus Budget Reconciliation Act of 1985
- D.
Family and Medical Leave Act of 1993
Correct Answer
C. Consolidated Omnibus Budget Reconciliation Act of 1985Explanation
Under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), individuals who voluntarily separate from employment are allowed to continue paying for their medical insurance at cost plus 2%. COBRA provides temporary continuation of group health coverage that would otherwise be terminated. This allows individuals to maintain their health insurance coverage even after leaving their job.Rate this question:
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- 3.
Brenda receives a prize as a winner of a sales contest. The prize, which is paid from her sales manager's petty cash account, is $25. Which of the following best represents the impact on her taxable wages?
- A.
The prize is a de minimis gift and excluded from taxable wages
- B.
The prize is subject to FIT, FITW, FICA, and FUTA
- C.
The prize represents a non-accountable business expense reimbursement and is subject to FIT, FITW, FICA, and FUTA
- D.
The prize represents a "gift of detached generosity" and is excluded from taxable income
Correct Answer
B. The prize is subject to FIT, FITW, FICA, and FUTAExplanation
The prize is subject to FIT, FITW, FICA, and FUTA because it is paid from the sales manager's petty cash account and is not considered a de minimis gift or a gift of detached generosity.Rate this question:
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- 4.
The Social Security Administration's Social Security Number Verification System (SSNVS) is available to employers for:
- A.
Verifying the amounts of taxes paid by employers
- B.
Validating Federal Employer Identification Numbers
- C.
Verifying the accuracy of employee's Social Security numbers
- D.
Confirming new hire information on job applications
Correct Answer
C. Verifying the accuracy of employee's Social Security numbersExplanation
The Social Security Administration's Social Security Number Verification System (SSNVS) allows employers to verify the accuracy of employee's Social Security numbers. This system helps employers ensure that the Social Security numbers provided by their employees are valid and match the information on record with the Social Security Administration. This verification process helps prevent identity theft and ensures that employers have accurate information for tax and employment purposes.Rate this question:
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- 5.
How should a meeting conclude?
- A.
Invite the participants who agree with your position to participate in the next step
- B.
Collect the participants' personal notes for filing
- C.
Summarize and outline next steps
- D.
Critique each participant's participation prior to closing the meeting
Correct Answer
C. Summarize and outline next stepsExplanation
A meeting should conclude by summarizing and outlining the next steps because this allows all participants to have a clear understanding of what needs to be done after the meeting. It helps ensure that everyone is on the same page and can start working towards the agreed-upon goals. Additionally, summarizing and outlining next steps helps to wrap up the meeting in a productive and efficient manner.Rate this question:
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- 6.
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.
Implementation plan
- B.
Groupware
- C.
Business continuity
- D.
Production plan
Correct Answer
C. Business continuityExplanation
Business continuity refers to a plan that outlines how a company will continue its operations in the event of a major disaster. It involves strategies and procedures that ensure the organization can continue to function and provide essential services to its customers. This plan typically includes measures such as backup systems, alternate work locations, and communication protocols to minimize the impact of a disaster on the company's operations.Rate this question:
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- 7.
An advantage of client/server technology for payroll is:
- A.
Fewer programmers are required to maintain the payroll
- B.
Maintenance fees from the vendor are eliminated
- C.
Programs and database need not be stored on the mainframe
- D.
Time required to balance a payroll is reduced.
Correct Answer
C. Programs and database need not be stored on the mainframeExplanation
One advantage of client/server technology for payroll is that programs and databases do not need to be stored on the mainframe. This allows for more flexibility in storing and accessing data, as well as reducing the reliance on a single mainframe system. It also allows for easier scalability and the ability to distribute processing across multiple servers, improving performance and efficiency.Rate this question:
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- 8.
"Mapping" in the context of a systems conversion refers to:
- A.
Defining resources needed for the project
- B.
Matching data from one system to the data of another
- C.
Developing a flow chart of the conversion process
- D.
Downloads from the mainframe to a PC application
Correct Answer
B. Matching data from one system to the data of anotherExplanation
In the context of a systems conversion, "mapping" refers to the process of matching data from one system to the data of another. This involves identifying equivalent data fields in both systems and ensuring that the data is accurately transferred and integrated during the conversion process. Mapping helps to ensure that the data from the old system can be effectively and correctly utilized in the new system, minimizing any potential data loss or inconsistencies.Rate this question:
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- 9.
A network is:
- A.
Terminals, hard drives, and printers
- B.
Software that provides for the creation of edit files
- C.
A picture of the flow of input through programs
- D.
A system in which computers and terminals are linked together
Correct Answer
D. A system in which computers and terminals are linked togetherExplanation
A network is a system in which computers and terminals are linked together. This means that multiple devices, such as computers, laptops, and terminals, are connected to each other through a network infrastructure, allowing them to communicate and share resources. This enables users to access and share information, files, and services across the network, enhancing collaboration and productivity.Rate this question:
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- 10.
One of the key concepts in total quality management is:
- A.
Employees are willing to accept responsibility
- B.
Management by "walking around"
- C.
Frequent inspection of every phase of a production cycle
- D.
Focus on customer satisfaction
Correct Answer
D. Focus on customer satisfactionExplanation
The correct answer is "Focus on customer satisfaction". This is a key concept in total quality management because it emphasizes the importance of meeting the needs and expectations of the customer. By focusing on customer satisfaction, organizations can ensure that they are delivering high-quality products and services that meet customer requirements. This concept also encourages continuous improvement and the involvement of all employees in understanding and meeting customer needs.Rate this question:
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- 11.
The term Workforce Management refers to:
- A.
Time management
- B.
Third party background check services
- C.
Recruiting services
- D.
Management of employee business functions
Correct Answer
D. Management of employee business functionsExplanation
Workforce Management refers to the management of employee business functions. This includes tasks such as scheduling, time tracking, attendance management, and resource allocation. It involves ensuring that the right employees are in the right place at the right time to meet business needs and optimize productivity. Workforce Management also involves forecasting and planning for future staffing requirements, as well as monitoring and analyzing employee performance and productivity.Rate this question:
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- 12.
The general term that describes the ability for employees to make changes to certain data in their own records within the payroll or HR system is called:
- A.
Employee self-service
- B.
Employee empowerment
- C.
Enabled systems
- D.
Extranet
Correct Answer
A. Employee self-serviceExplanation
Employee self-service refers to the ability of employees to access and update their personal information within the payroll or HR system. This allows employees to make changes to certain data, such as updating their contact information or viewing their pay stubs, without having to rely on HR or payroll personnel. It empowers employees to take control of their own information and reduces the administrative burden on HR and payroll departments.Rate this question:
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- 13.
Which of the following is the first step on goal-setting?
- A.
Ask other department managers for copies of their written plans
- B.
Develop a plan of action
- C.
Obtain salary history for all staff members
- D.
Review the department members' performance appraisals
Correct Answer
B. Develop a plan of actionExplanation
Developing a plan of action is the first step in goal-setting because it involves analyzing the current situation, identifying the desired outcome, and determining the specific steps and strategies needed to achieve the goal. This step helps to clarify objectives, establish priorities, and create a roadmap for success. It sets the foundation for effective goal-setting by providing a clear direction and guiding the decision-making process. Asking other department managers for copies of their written plans, obtaining salary history, and reviewing performance appraisals may be relevant in certain contexts but are not directly related to the initial step of developing a plan of action.Rate this question:
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- 14.
Which of the following employee's wages is likely to be subject to FUTA?
- A.
A child under age 21 employed by parent
- B.
A spouse employed by spouse
- C.
A parent employed by his or her child
- D.
A statutory employee
Correct Answer
D. A statutory employeeExplanation
A statutory employee's wages are likely to be subject to FUTA. FUTA stands for Federal Unemployment Tax Act, which requires employers to pay unemployment taxes on behalf of their employees. Statutory employees are individuals who are treated as employees for tax purposes, even though they may be independent contractors under common law rules. Therefore, their wages are subject to FUTA taxes.Rate this question:
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- 15.
Which of the following employees' wages is likely to be exempt from FICA?
- A.
A child under age 18 employed by a parent
- B.
A parent working for a child
- C.
A spouse working for a spouse
- D.
A statutory employee
Correct Answer
A. A child under age 18 employed by a parentExplanation
The wages of a child under age 18 employed by a parent are likely to be exempt from FICA because the parent-child employment relationship is not subject to FICA taxes. FICA taxes are typically applied to wages earned by employees to fund Social Security and Medicare programs. However, there are exemptions for certain family employment situations, such as a child working for a parent. Therefore, it is likely that the wages of a child under age 18 employed by a parent would be exempt from FICA taxes.Rate this question:
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- 16.
The effective minimum hourly rate that tipped employees must receive is which of the following?
- A.
50% of the federal minimum wage
- B.
100% of the federal minimum wage
- C.
20% of the federal minimum wage
- D.
No particular rate is required
Correct Answer
B. 100% of the federal minimum wageExplanation
Tipped employees must receive 100% of the federal minimum wage as their effective minimum hourly rate. This means that if their tips do not add up to meet the federal minimum wage, the employer must make up the difference.Rate this question:
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- 17.
Which of the following forms must be submitted annually by large food and beverage establishments with monthly deposit obligations of more than $100,000?
- A.
8027
- B.
944
- C.
4070
- D.
942
Correct Answer
A. 8027Explanation
Large food and beverage establishments with monthly deposit obligations of more than $100,000 must submit form 8027 annually.Rate this question:
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- 18.
Which of the following does NOT represent a deductible business expense?
- A.
Country club dues
- B.
Lodging while on business travel
- C.
Dry cleaning charges while out of town on business
- D.
Golfing event following a business meeting
Correct Answer
A. Country club duesExplanation
Country club dues do not represent a deductible business expense because they are considered personal expenses and not directly related to the operation of a business. Deductible business expenses are expenses that are necessary and ordinary for carrying out business activities, such as lodging while on business travel, dry cleaning charges while out of town on business, and expenses directly related to a business meeting.Rate this question:
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- 19.
Which of the following forms is completed by an individual who is eligible for and wishes to receive advance payment of the earned income credit?
- A.
W-5
- B.
W-4
- C.
W-4S
- D.
W-10
Correct Answer
A. W-5Explanation
The correct form to be completed by an individual who is eligible for and wishes to receive advance payment of the earned income credit is the W-5. This form is specifically designed for individuals who want to receive advance payments of the earned income credit throughout the year instead of waiting until they file their tax return. It allows them to estimate their eligibility and receive the credit in advance, which can help with financial planning and budgeting.Rate this question:
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- 20.
Which of the following would not be included in the system testing stage of an implementation?
- A.
Volume testing
- B.
Functional testing
- C.
Stress testing
- D.
Recruiting tests
Correct Answer
D. Recruiting testsExplanation
Recruiting tests would not be included in the system testing stage of an implementation because they are not related to the functionality, performance, or reliability of the system being tested. System testing focuses on evaluating the system as a whole to ensure that it meets the specified requirements and functions correctly under normal and expected conditions. Recruiting tests, on the other hand, are used for assessing the skills and qualifications of potential candidates for job positions and are not directly related to the system being implemented.Rate this question:
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- 21.
An employer that pays its state unemployment contributions after the due date of the Form 940 has it's FUTA credit reduced by what percentage?
- A.
90.0%
- B.
10.0%
- C.
5.4%
- D.
6.2%
Correct Answer
B. 10.0%Explanation
If an employer pays its state unemployment contributions after the due date of the Form 940, its FUTA credit is reduced by 10.0%.Rate this question:
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- 22.
Which of the following documents proves both identity and right to work for Form I-9 verification purposes?
- A.
Social Security card
- B.
Driver's license
- C.
U.S. Passport
- D.
Birth Certificate
Correct Answer
C. U.S. PassportExplanation
A U.S. Passport is considered a valid document for both proving identity and right to work for Form I-9 verification purposes. This is because a U.S. Passport is a government-issued document that verifies the individual's identity and citizenship. It serves as proof that the individual is legally allowed to work in the United States.Rate this question:
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- 23.
What does the following journal entry represent? Debit State Unemployment Tax Payable $6,340.00 Credit Cash $6,340.00
- A.
The payment of state unemployment tax one or more states
- B.
A record of tax deductions
- C.
The accrual of state unemployment tax liabilities
- D.
An entry to correct tax withheld
Correct Answer
A. The payment of state unemployment tax one or more statesExplanation
The journal entry represents the payment of state unemployment tax to one or more states. This is indicated by the debit to State Unemployment Tax Payable, which represents the liability for the tax, and the credit to Cash, which represents the payment made.Rate this question:
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- 24.
A U.S. citizen working for a foreign employer outside the United States is subject to which of the following taxes?
- A.
Social Security and Medicare only
- B.
Federal income tax withholding, Social Security, Medicare, and FUTA
- C.
Federal income tax withholding only
- D.
None
Correct Answer
C. Federal income tax withholding onlyExplanation
A U.S. citizen working for a foreign employer outside the United States is subject to federal income tax withholding only. This means that they are still required to have federal income tax withheld from their wages, even though they are not working for a U.S. employer or physically present in the United States. They are not subject to Social Security, Medicare, or FUTA taxes in this scenario.Rate this question:
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- 25.
Each month ABC Company records the amount of after-tax long-term disability (LTD) insurance purchased by its employees who elected to purchase this insurance. The deduction is equal to the cost of the insurance. In the month following the deduction, the insurance company invoices ABC Company. ABC then pays the invoice. At the end of April, the balance in the LTD general ledger liability account is $438.40. What does this balance represent?
- A.
Over-payments to the insurance company
- B.
Amounts paid to the insurance company
- C.
Amounts that have been deducted but not paid to the insurance company
- D.
Amounts deducted from employees who have terminated employment
Correct Answer
C. Amounts that have been deducted but not paid to the insurance companyExplanation
The balance of $438.40 in the LTD general ledger liability account represents the amounts that have been deducted from employees' paychecks for long-term disability insurance but have not yet been paid to the insurance company. This indicates that the deductions have been made from the employees' salaries, but the payment to the insurance company has not been made yet.Rate this question:
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Mar 21, 2023Quiz Edited by
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Aug 17, 2011Quiz Created by
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