CPP Practice Exam 2

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  • 1/25 Questions

    Which of the following is one of the purposes of a job description?

    • Defining the company policy on paying overtime
    • Setting expectations for work to be performed
    • Describing benefits for which the incumbent is eligible
    • Outlining the company's position on job cost accounting
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About This 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. See moreQuestions 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 well.

CPP Practice Exam 2 - Quiz

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  • 2. 

    Which of the following forms must the employer receive as authorization to discontinue withholding under a federal tax levy notice?

    • 668-W(c)

    • I-9

    • 668-D

    • 2678

    Correct Answer
    A. 668-D
    Explanation
    The correct answer is 668-D. This form is required for an employer to receive authorization to discontinue withholding under a federal tax levy notice. It is important for the employer to have this form in order to comply with the levy and stop withholding the specified amount from the employee's wages. The other options listed are not relevant to this specific purpose.

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  • 3. 

    The penalty for failure to withhold wages under a federal tax levy notice is:

    • 150% of the amount not withheld

    • 100% of the amount not withheld

    • 50% of the amount not withheld

    • 75% of the amount not withheld

    Correct Answer
    A. 50% of the amount not withheld
    Explanation
    Failure to withhold wages under a federal tax levy notice results in a penalty of 50% of the amount not withheld. This means that if an employer fails to withhold a certain portion of an employee's wages as required by a federal tax levy notice, they will be penalized by having to pay an additional 50% of the amount that was not withheld.

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  • 4. 

    In a leasing arrangement, which of the following is not assumed by the leasing company?

    • Hiring of employees

    • Termination of employees

    • Payment of employees

    • Product research

    Correct Answer
    A. Product research
    Explanation
    The leasing company does not assume the responsibility of conducting product research. This means that it is not their responsibility to conduct any research or development activities related to the products being leased. They are only responsible for other aspects such as hiring and payment of employees, as well as the termination of employees if necessary.

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  • 5. 

    An employer may accept a child support order directly served from another state without risk of liability under which of the following laws?

    • URESA

    • UIFSA

    • ERISA

    • OCSE

    Correct Answer
    A. UIFSA
    Explanation
    The correct answer is UIFSA. UIFSA stands for the Uniform Interstate Family Support Act, which is a law that governs the enforcement of child support orders across state lines. Under UIFSA, an employer can accept a child support order directly served from another state without facing any liability. This law ensures that child support orders are recognized and enforced consistently across different jurisdictions.

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  • 6. 

    Portability describes the attribute of software to:

    • Print output in duplex

    • Execute on other platforms without application code modifications

    • Use telephone lines to communicate between physical locations

    • Use video and audio

    Correct Answer
    A. Execute on other platforms without application code modifications
    Explanation
    Portability refers to the ability of software to run on different platforms without requiring any changes to the application code. This means that the software can be easily transferred or moved from one platform to another without any compatibility issues or the need for rewriting or modifying the code. It allows the software to be used on various operating systems or hardware configurations, making it more flexible and versatile.

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  • 7. 

    Under IRS suggested guidelines, an employee should be allowed a maximum of how many days after receiving an expense advance to provide substantiation for the amount to the employer?

    • 30 days

    • 45 days

    • 60 days

    • 90 days

    Correct Answer
    A. 60 days
    Explanation
    According to the IRS suggested guidelines, an employee should be allowed a maximum of 60 days after receiving an expense advance to provide substantiation for the amount to the employer. This means that the employee has two months to provide the necessary documentation or evidence to support the expenses incurred. It is important for the employee to meet this deadline to ensure compliance with IRS regulations and to avoid any potential issues or penalties.

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  • 8. 

    Which of the following would NOT be defined as a tax-deferred benefit?

    • 401(k) pretax contributions

    • 125 pretax contributions

    • 403(b) pretax contributions

    • Non qualified plan contributions

    Correct Answer
    A. 125 pretax contributions
    Explanation
    A 125 pretax contribution refers to a flexible spending account (FSA), which allows employees to set aside a portion of their pre-tax salary to pay for eligible expenses such as medical or dependent care. While this contribution is made with pre-tax dollars, it is not considered a tax-deferred benefit because the funds must be used within the plan year and cannot be carried over. In contrast, 401(k), 403(b), and non-qualified plan contributions are all examples of tax-deferred benefits because they allow individuals to contribute pre-tax dollars towards retirement savings, which are then taxed when withdrawn in the future.

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  • 9. 

    FLSA coverage does not apply under which of the following conditions?

    • All employees are part time workers

    • Employees are paid $2.13 per hour

    • Employer and employees are not engaged in interstate commerce

    • Employees are minors under the age of 18

    Correct Answer
    A. Employer and employees are not engaged in interstate commerce
    Explanation
    The Fair Labor Standards Act (FLSA) is a federal law that establishes minimum wage, overtime pay, recordkeeping, and child labor standards for employees in the United States. One of the conditions for FLSA coverage is that the employer and employees must be engaged in interstate commerce. This means that their work involves activities that cross state lines or have an impact on interstate commerce. If the employer and employees are not engaged in interstate commerce, FLSA coverage does not apply to them.

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  • 10. 

    Chicken Licken requires that all employees wear uniforms that are unique to chicken Licken restaurants.  New employees are required to pay $40 for their uniforms from their first regular paycheck.  Assume that it is September 2009, and one of tis new employees earns $8.20 per hour and works 42 hours in the first workweek ending September 18.  What is the maximum that Chicken Licken can deduct from this employees wages for the uniform?

    • $0

    • $39.90

    • $48.10

    • $38.00

    Correct Answer
    A. $39.90
    Explanation
    According to the Fair Labor Standards Act (FLSA), an employer can deduct the cost of uniforms from an employee's wages if the deduction does not reduce the employee's earnings below the minimum wage.
    In this case, the employee's gross earnings for the first workweek are 42 hours * $8.20/hour = $344.40.
    To determine the maximum deduction, we need to calculate the employee's wages after the deduction and ensure they are not below the minimum wage. In September 2009, the federal minimum wage was $7.25 per hour.
    For 42 hours of work at the minimum wage, the employee must earn at least 42 hours * $7.25/hour = $304.50.
    Therefore, the maximum deduction allowed is $344.40 - $304.50 = $39.90.
    However, the uniform cost is $40, which is slightly higher than the allowed deduction. In this case, Chicken Licken can only deduct a maximum of $38.00 to ensure the employee's earnings remain at or above the minimum wage after the deduction.

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  • 11. 

    Which fo the following accoutns has a normal debit balance?

    • Liability

    • Revenue

    • Equity

    • Expense

    Correct Answer
    A. Expense
    Explanation
    Expense accounts have a normal debit balance because they represent costs or expenses incurred by a business. Debits increase expense accounts, reflecting an increase in costs or expenses. This is consistent with the accounting principle of recording expenses on the debit side of the equation.

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  • 12. 

    Bass Biting Company operates a 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 it's 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?

    • $93.00

    • $186.00

    • $46.00

    • $0

    Correct Answer
    A. $0
    Explanation
    To determine the amount exempt from wages for each employee's group-term life insurance, we first calculate the annual value of the benefit, then subtract the exclusion amount, and finally divide by the number of pay periods in a year.

    For George (the President):
    Annual value of benefit = $93/month × 12 months = $1,116
    Exclusion amount = $50,000
    Taxable portion = $1,116 - $50,000 = -$48,884 (since the benefit is fully excluded)
    Exempt amount = $0

    For Earl (the salesperson):
    Annual value of benefit = $93/month × 12 months = $1,116
    Exclusion amount = $50,000
    Taxable portion = $1,116 - $50,000 = -$48,884 (since the benefit is fully excluded)
    Exempt amount = $0

    Therefore, no amount is exempt from wages for both George and Earl, as the entire value of their group-term life insurance benefit is excluded from taxable income.

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  • 13. 

    Bass Biting Company operates a 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 it's 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 Biting'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.

    • $173.04

    • $557.44

    • $57.72

    • $0

    Correct Answer
    A. $0
    Explanation
    According to the information provided, Jim was paid $500 for 4 days of work, which means he was paid a flat rate for his work and not on an hourly basis. Therefore, he is not eligible for any overtime pay under the Fair Labor Standards Act (FLSA).

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  • 14. 

    Bass Biting Company operates a 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 it's 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 Bititng through its busy season.  Determine Lois' employment status with Bass Biting

    • Nonstaturory employee

    • Independent contractor

    • Statutory nonemployee

    • Employee

    Correct Answer
    A. Employee
    Explanation
    Lois is considered an employee of Bass Biting Company. Even though she retired on June 30, she returned to work on August 15 and assisted the company through its busy season until Labor Day. This indicates that she is still providing services to the company as an employee, even if it is on a temporary basis.

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  • 15. 

    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 password

    • An interface

    • A firewall

    • Open systems

    Correct Answer
    A. An interface
    Explanation
    When an interface is used, employee data does not need to be entered in both the payroll system and the time and attendance system. An interface allows for the seamless transfer of data between different systems, eliminating the need for duplicate data entry. This ensures that employee information is accurately and efficiently shared between the two systems, reducing the chances of errors or discrepancies.

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  • 16. 

    Under the FLSA, employees working in the New England states for a product distributor are entitled to which of the following overtime pay benefits?

    • Overtime is paid for all hours worked over 8 per day

    • Overtime is paid for hours worked over 40 in a work week

    • Compensatory pay is allowed for hours over 80 in a biweekly pay period

    • Double time is paid for work on holidays

    Correct Answer
    A. Overtime is paid for hours worked over 40 in a work week
    Explanation
    Employees working in the New England states for a product distributor are entitled to overtime pay for hours worked over 40 in a work week. This means that if an employee works more than 40 hours in a single work week, they are eligible to receive additional compensation for those extra hours. The other options mentioned in the question do not apply to the overtime pay benefits under the FLSA for employees in this specific scenario.

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  • 17. 

    Which of the following supports payroll system security?

    • Constructive receipt

    • Labor law compliance

    • New hire reporting

    • Audit trails

    Correct Answer
    A. Audit trails
    Explanation
    Audit trails support payroll system security by providing a detailed record of all activity and changes made within the system. This includes information such as who accessed the system, what changes were made, and when they occurred. By maintaining a comprehensive audit trail, organizations can monitor and track any unauthorized access or suspicious activity, ensuring the integrity and confidentiality of payroll data. Additionally, audit trails can be used for compliance purposes, as they provide evidence of adherence to security protocols and regulatory requirements.

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  • 18. 

    Which of the following is an example of a system edit?

    • Firewalls are in place to guard against unauthorized Internet users

    • A pop-up message alerts the user that a date entered is invalid

    • Step-by-step procedures are followed by the payroll specialist

    • The system has a batch report writer

    Correct Answer
    A. A pop-up message alerts the user that a date entered is invalid
    Explanation
    This answer is correct because a pop-up message alerting the user that a date entered is invalid is an example of a system edit. System edits are used to validate and verify data input to ensure its accuracy and integrity. In this case, the system is programmed to detect if a date entered by the user is invalid and display a pop-up message to notify the user of the error. This helps prevent incorrect or invalid data from being entered into the system.

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  • 19. 

    The primary responsibility of Professional Employer Organizations is:

    • Establishing their client's FEIN

    • Co-employment of their client's employees

    • Leasing the buildings and fixtures

    • Determining the client's products and services

    Correct Answer
    A. Co-employment of their client's employees
    Explanation
    Professional Employer Organizations (PEOs) have the primary responsibility of co-employing their client's employees. This means that the PEO becomes the employer of record for the employees, taking care of HR tasks such as payroll, benefits administration, and compliance. By co-employing the employees, the PEO shares certain employer responsibilities and liabilities with the client, allowing the client to focus on their core business activities. This arrangement can provide benefits such as cost savings, access to better employee benefits, and expert HR support for the client.

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  • 20. 

    Josh, a nonexempt accounting specialist, is assigned to a normal work schedule of 40 hours a week, 8:00 a.m. to 5:00 p.m. each day, with one hour for lunch.  On Monday, Josh travels by train from Boston to a business meeting in his company's Phhilidelphia office.  The train leaves at 8:00 a.m. and arrives in time for Josh to attend the afternoon meeting, which concludes at 5:30 p.m.  He then returns to Boston on a train that leaves at 7:00 p.m.  If Josh does not miss any work the rest of the week, what hours for Monday may be subject to overtime?

    • None

    • 8.5 hours

    • 0.5 hours

    • 2.0 hours

    Correct Answer
    A. 0.5 hours
  • 21. 

    Which of the following sets of data should be maintained on the payroll master file?

    • Employer's date of incorporation

    • Name and address of benefits provider

    • Deductions made to satisfy an IRS levy

    • Employee's prior employment history

    Correct Answer
    A. Deductions made to satisfy an IRS levy
    Explanation
    The deductions made to satisfy an IRS levy should be maintained on the payroll master file because it is important for the employer to keep track of these deductions and ensure that they are properly applied. This information is necessary for accurate payroll calculations and compliance with tax regulations. Additionally, maintaining this data allows the employer to provide documentation and evidence of the deductions if required by the IRS or other authorities.

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  • 22. 

    Which of the following employees is most likely to be an exempt professional under FLSA?

    • Labor Relations Director

    • Payroll specialist

    • Human resources receptionist

    • Accounts payable clerk

    Correct Answer
    A. Labor Relations Director
    Explanation
    The Labor Relations Director is most likely to be an exempt professional under FLSA because this position typically involves high-level decision-making and policy creation, which are characteristics of exempt professional roles. Additionally, exempt professionals usually have advanced knowledge and specialized expertise in their field, which is likely to be the case for a Labor Relations Director.

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  • 23. 

    Which of the following accounts has a normal credit balance?

    • Asset

    • Liability

    • Expense

    • Cash

    Correct Answer
    A. Liability
    Explanation
    A liability account has a normal credit balance because it represents an obligation or debt that the company owes to others. When a liability is increased, it is recorded as a credit entry, and when it is decreased, it is recorded as a debit entry. This is in accordance with the basic accounting principle of double-entry bookkeeping, where every transaction has an equal and opposite effect on both sides of the accounting equation. Therefore, the correct answer is liability.

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  • 24. 

    Which of the following would not be included in the Needs Analysis stage of a system evaluation?

    • Review of the current system

    • System testing

    • Creating a current cost model

    • Defining the company's technical direction

    Correct Answer
    A. System testing
    Explanation
    System testing would not be included in the Needs Analysis stage of a system evaluation because the purpose of this stage is to identify and analyze the needs and requirements of the system, not to test the system itself. System testing typically occurs in later stages of the evaluation process, after the needs have been identified and the system has been designed and developed.

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  • 25. 

    Which of the following general ledger accounts is integral to a quarterly deposit reconcilitation?

    • Payroll cash

    • Salary cash

    • Accrued wages payable

    • Tax liabilities

    Correct Answer
    A. Tax liabilities
    Explanation
    Tax liabilities is integral to a quarterly deposit reconciliation because it represents the amount of taxes that a company owes to the government. During the reconciliation process, the company compares the tax liabilities recorded in the general ledger with the actual tax payments made to ensure accuracy and compliance. This helps to identify any discrepancies or errors in the tax calculations or payments, allowing the company to make any necessary adjustments or corrections. Therefore, tax liabilities play a crucial role in the quarterly deposit reconciliation process.

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  • Current Version
  • Oct 01, 2024
    Quiz Edited by
    ProProfs Editorial Team
  • Aug 12, 2011
    Quiz Created by
    V091200

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