CPP Practice Exam 11
.jpg "CPP Practice Exam 11 - Quiz")
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.
Questions and Answers
- 1.
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.
4.5%
- C.
5.4%
- D.
6.2%
Correct Answer
C. 5.4%Explanation
In non-credit reduction states, employers who pay their state unemployment taxes on time can deduct up to 5.4% when calculating their FUTA tax payments.Rate this question:
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- 2.
Which of the following items determines the disposition of unclaimed wages?
- A.
State law only
- B.
Federal law only
- C.
Federal and state law
- D.
No recognized procedures exist
Correct Answer
A. State law onlyExplanation
The disposition of unclaimed wages is determined by state law only. This means that each state has its own regulations and procedures for handling unclaimed wages, and employers must comply with these laws in order to properly distribute or report unclaimed wages. Federal law does not specifically address the disposition of unclaimed wages, so it is not a determining factor in this matter.Rate this question:
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- 3.
Under NACHA rules, employers are advised to retain a copy of the employee's written authorization for direct deposit for at least:
- A.
4 years
- B.
2 years
- C.
3 years
- D.
1 years
Correct Answer
B. 2 yearsExplanation
Under NACHA rules, employers are advised to retain a copy of the employee's written authorization for direct deposit for at least 2 years. This is important because it serves as proof that the employee has given consent for direct deposit and can be used as evidence in case of any disputes or investigations. Retaining the authorization for this period ensures that the employer has the necessary documentation to support the direct deposit transactions made during that time.Rate this question:
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- 4.
Which of the following benefits is allowable in an 125 plan?
- A.
Transportation fringe benefits
- B.
403(b)
- C.
Educational assistance
- D.
Disability insurance
Correct Answer
D. Disability insuranceExplanation
Disability insurance is allowable in a 125 plan. A 125 plan, also known as a cafeteria plan, is an employee benefit plan that allows employees to choose from a variety of pre-tax benefits. Disability insurance provides income replacement in the event that an employee becomes disabled and is unable to work. This benefit helps to protect employees financially in case of unexpected disability and is therefore allowable in a 125 plan.Rate this question:
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- 5.
Sick pay under a definite plan or system is NOT subject to mandatory federal income tax withholding when paid:
- A.
From an employer's self-insured plan
- B.
By an agent of the employer
- C.
From a disability retirement plan
- D.
By a third-party insurance provider
Correct Answer
D. By a third-party insurance providerExplanation
Sick pay under a definite plan or system is not subject to mandatory federal income tax withholding when paid by a third-party insurance provider because it is considered an insurance benefit. In this case, the employer has contracted with a third-party insurance provider to provide sick pay benefits to their employees. Since the payment is made by the insurance provider and not directly by the employer, it is not subject to federal income tax withholding.Rate this question:
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- 6.
An employee contributes $2,000 on a pretax basis to a 401(k) qualified plan. How is this pretax contribution reported on the 2009 W-2?
- A.
Box 1, box 3/5, box 13 (retirement plan)
- B.
Boxes 3/5, box 13, (retirement plan)
- C.
Boxes 3/5, box 12, box 13 (retirement plan)
- D.
Box 12, box 13 (retirement plan)
Correct Answer
C. Boxes 3/5, box 12, box 13 (retirement plan)Explanation
The pretax contribution to the 401(k) qualified plan is reported on the 2009 W-2 in Boxes 3/5, box 12, and box 13 under the category of "retirement plan."Rate this question:
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- 7.
Which of the following generally does NOT represent compensable time under the FLSA?
- A.
Travel to a convention after normal working hours
- B.
Time spent cleaning up work area after normal shift
- C.
Time sent in break room waiting for job instructions
- D.
Overtime hours not authorized by the employer
Correct Answer
A. Travel to a convention after normal working hoursExplanation
Travel to a convention after normal working hours generally does not represent compensable time under the FLSA because it is considered personal time and not directly related to work duties or responsibilities. Compensable time refers to the hours for which an employee must be paid, and in this case, the travel to a convention is outside of normal working hours and is not considered work-related.Rate this question:
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- 8.
Which of the following sets of data should be maintained on the payroll master file?
- A.
Next of kin relationship
- B.
Name, address, occupation
- C.
Children's names and birth dates
- D.
Primary physician's name, and phone number
Correct Answer
B. Name, address, occupationExplanation
The data that should be maintained on the payroll master file includes the employee's name, address, and occupation. This information is essential for accurately identifying and categorizing employees within the payroll system. It helps ensure that the correct individuals are being paid and that their employment details are up to date.Rate this question:
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- 9.
Under the claim-of-right rule, a salary overpayment that is discovered by the employer in the tax year follwoing 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.
Cannot be deducted from wages at all
- D.
Can be deducted from wages on an after-tax basis
Correct Answer
D. Can be deducted from wages on an after-tax basisExplanation
Under the claim-of-right rule, a salary overpayment that is discovered by the employer in the tax year following the year of overpayment can be deducted from wages on an after-tax basis. This means that the employer can deduct the overpayment from the employee's wages after taxes have been calculated and withheld. This is because the employee has already received the overpayment and does not have a right to keep the excess amount. Therefore, the employer can recover the overpayment by deducting it from the employee's wages on an after-tax basis.Rate this question:
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- 10.
Under FLSA, how many hours would be paid a time and one half for the following biweekly period, assuming that the employee is a health care professional paid under the special FLSA rules.
- A.
0
- B.
16
- C.
24
- D.
12
Correct Answer
C. 24Explanation
According to the FLSA rules for health care professionals, they are entitled to receive overtime pay at a rate of one and a half times their regular hourly rate for any hours worked beyond 40 in a workweek. Since the question asks for the number of hours that would be paid at time and a half for a biweekly period, we need to calculate the total number of hours worked in that period. Assuming the employee works 8 hours per day, 5 days a week, for a total of 40 hours in a week, the biweekly period would consist of 80 hours. Since all 80 hours fall within the regular 40-hour workweek, there are no hours that would be paid at time and a half. Therefore, the correct answer is 0.Rate this question:
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- 11.
What is the total amount reported in box 3, Social Security wages, for these employees?
- A.
$373,418
- B.
$362,938
- C.
$387,520
- D.
$321,100
Correct Answer
D. $321,100Explanation
The total amount reported in box 3, Social Security wages, for these employees is $321,100.Rate this question:
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- 12.
What is the total amount reported in box 10, "dependent care benefits?"
- A.
$ 0
- B.
$4,980
- C.
$5,500
- D.
$10,480
Correct Answer
B. $4,980Explanation
The total amount reported in box 10, "dependent care benefits," is $4,980.Rate this question:
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- 13.
What is the total amount that must be reported in box 14?
- A.
$ 0
- B.
$4,980
- C.
$10,480
- D.
$23,582
Correct Answer
A. $ 0Explanation
The total amount that must be reported in box 14 is $0. This means that there are no additional amounts or earnings that need to be reported in this box.Rate this question:
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- 14.
What is the amount reported in box 12, and what code is used?
- A.
C 4,980
- B.
C 10,480
- C.
D 24,582
- D.
D 29,682
Correct Answer
C. D 24,582Explanation
The amount reported in box 12 is D 24,582 and the code used is not provided.Rate this question:
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- 15.
Under the FLSA, how many hours would be paid at time and one half for the following biweekly period, assuming that the employee is an assembly line worker?
- A.
0
- B.
8
- C.
10
- D.
20
Correct Answer
B. 8Explanation
The correct answer is 8. According to the Fair Labor Standards Act (FLSA), employees who work more than 40 hours in a workweek are eligible for overtime pay at a rate of one and a half times their regular hourly rate. Since the question asks about a biweekly period, we need to divide the total number of hours worked by 2. Therefore, if the employee is an assembly line worker and has worked 16 hours in the given biweekly period, only 8 of those hours would be eligible for overtime pay at time and a half.Rate this question:
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- 16.
Under the FLSA, how many hours would be paid at time and one half for the following biweekly period, assuming that the employee is an garment worker?
- A.
8
- B.
0
- C.
8.5
- D.
0.5
Correct Answer
A. 8 -
- 17.
Under FLSA, how many hours must be paid at the overtimve rate of pay for the following biweekly period: * Represents 8 hours of sick pay leave
- A.
0
- B.
2
- C.
10
- D.
16
Correct Answer
A. 0Explanation
The question asks how many hours must be paid at the overtime rate of pay for a biweekly period. However, the information provided does not mention anything about overtime hours or the overtime rate of pay. Therefore, it can be concluded that no hours need to be paid at the overtime rate of pay for this biweekly period.Rate this question:
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- 18.
Under FLSA, how many hours must be paid at the overtime rate of pay for the following biweekly period, assuming the employer is a hospital qualified under the special provisions of the FLSA?
- A.
40
- B.
15
- C.
8
- D.
4
Correct Answer
C. 8Explanation
Under the Fair Labor Standards Act (FLSA), employees in hospitals qualified under special provisions have a unique method of calculating overtime. In a given biweekly schedule provided:
Week I: 40 hours worked
Week II: 48 hours worked
Total hours worked over two weeks: 88 hours.
Under the FLSA for hospitals, overtime is calculated for any hours worked over 80 in a 14-day period. Since the employee worked 88 hours in this period, 8 hours must be paid at the overtime rate. So, the answer is 8 hours.Rate this question:
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- 19.
An employee is terminated with 3 workdays remaining in a month. The employee earned an annual salary of $24,000 and was paid semimonthly. What is the regular compensation due this employee for the final pay period?
- A.
$723.07
- B.
$782.61
- C.
$800.00
- D.
$869.57
Correct Answer
A. $723.07Explanation
The regular compensation due to the employee for the final pay period can be calculated by dividing the annual salary by the number of pay periods in a year. Since the employee is paid semi-monthly, there are 24 pay periods in a year. Therefore, the regular compensation due would be $24,000/24 = $1,000 per pay period. Since the employee was terminated with 3 workdays remaining in the month, the final pay period would only include the compensation for those 3 workdays, which would be 3/10 * $1,000 = $300. However, the question asks for the regular compensation due, so we need to subtract the compensation for the remaining workdays from the total regular compensation. Therefore, the correct answer is $1,000 - $300 = $700.Rate this question:
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- 20.
Employee deferrals under section 401(k) are subject to which taxes?
- A.
Federal income and social security and Medicare taxes
- B.
Social security and Medicare taxes only
- C.
Social security, Medicare, and FUTA taxes
- D.
Federal income, social security, Medicare, and FUTA taxes
Correct Answer
C. Social security, Medicare, and FUTA taxesExplanation
Employee deferrals under section 401(k) are subject to social security, Medicare, and FUTA taxes. This means that when an employee contributes to their 401(k) plan, they are still required to pay these taxes on their contributions. These taxes are used to fund programs such as Social Security, Medicare, and unemployment benefits. Therefore, even though the employee is deferring a portion of their income into their retirement savings, they are still responsible for paying these taxes.Rate this question:
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- 21.
What does it mean if, at the end of an accounting period, a company has a debit balance in a liability account?
- A.
The company has under-deposited taxes withheld from employee wages
- B.
The company has not yet paid the third party
- C.
The company has withheld too much from the employee
- D.
The company has paid to a third party more than was withheld from the employee
Correct Answer
D. The company has paid to a third party more than was withheld from the employeeExplanation
If a company has a debit balance in a liability account at the end of an accounting period, it means that the company has paid more money to a third party than what was withheld from the employee. This suggests that the company has overpaid its obligations and has a liability to the third party for the excess amount paid.Rate this question:
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- 22.
All of the following factors are advantages of having an in-house developed system EXCEPT:
- A.
Scheduling flexibility
- B.
User groups
- C.
Security
- D.
Control of the system
Correct Answer
B. User groupsExplanation
An in-house developed system offers several advantages such as scheduling flexibility, security, and control of the system. However, user groups are not an advantage of having an in-house developed system. User groups typically refer to a feature or functionality that allows users to be organized into specific groups with different access levels or privileges. While this can be a useful feature in many software systems, it is not necessarily an advantage specific to in-house developed systems.Rate this question:
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- 23.
A payroll department manager should assure:
- A.
An independent mission statement
- B.
Appropriate training and equipment resources for staff members
- C.
Immediate enactment of employee suggestions
- D.
Top payment of staff
Correct Answer
B. Appropriate training and equipment resources for staff membersExplanation
The correct answer is "appropriate training and equipment resources for staff members." The payroll department manager should ensure that the staff members have the necessary training and equipment resources to effectively carry out their job responsibilities. This is important to ensure accuracy and efficiency in processing payroll and to avoid any errors or delays. Providing appropriate training and equipment resources also helps to enhance the skills and productivity of the staff members, ultimately benefiting the overall performance of the payroll department.Rate this question:
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- 24.
Which of the following statements describes a self-insured workers' compensation plan?
- A.
The state pays the workers' compensation payments
- B.
The employer funds the workers' compensation payments
- C.
The wages will continue as if the employee is still working
- D.
The individual employee is responsible for his own insurance
Correct Answer
B. The employer funds the workers' compensation paymentsExplanation
A self-insured workers' compensation plan is a type of insurance arrangement where the employer takes on the financial responsibility for providing compensation to employees who are injured or become ill on the job. In this type of plan, the employer funds the workers' compensation payments directly, rather than purchasing a traditional insurance policy. This allows the employer to have more control over the claims process and potentially save money on insurance premiums.Rate this question:
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- 25.
The proper handling of a stop payment includes all of the following steps EXCEPT:
- A.
Reversing the direct deposit
- B.
Cancelling the payment in the payroll system
- C.
Notifying the bank account reconciliation employees
- D.
Documenting the reason for the transaction
Correct Answer
A. Reversing the direct depositExplanation
The proper handling of a stop payment includes cancelling the payment in the payroll system, notifying the bank account reconciliation employees, and documenting the reason for the transaction. However, reversing the direct deposit is not a step that needs to be taken in the process of handling a stop payment.Rate this question:
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.jpg "What is the total amount reported in box 3, Social Security wages, for these employees?")
.jpg "What is the total amount reported in box 10, \"dependent care benefits?\"")
.jpg "What is the total amount that must be reported in box 14?")
.jpg "What is the amount reported in box 12, and what code is used?")
.jpg "Under the FLSA, how many hours would be paid at time and one half for the following biweekly period, assuming that the employee is an assembly line worker?")
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