CPP Practice Exam 2
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.
Which of the following is one of the purposes of a job description?
- A.
Defining the company policy on paying overtime
- B.
Setting expectations for work to be performed
- C.
Describing benefits for which the incumbent is eligible
- D.
Outlining the company's position on job cost accounting
Correct Answer
B. Setting expectations for work to be performedExplanation
A job description serves the purpose of setting expectations for the work that needs to be performed by an employee. It outlines the tasks, responsibilities, and duties associated with a particular job role. It helps both the employer and the employee to have a clear understanding of what is expected in terms of job performance and deliverables. This information is crucial for effective recruitment, selection, and performance evaluation processes.Rate this question:
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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?
- A.
668-W(c)
- B.
I-9
- C.
668-D
- D.
2678
Correct Answer
C. 668-DExplanation
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.Rate this question:
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- 3.
The penalty for failure to withhold wages under a federal tax levy notice is:
- A.
150% of the amount not withheld
- B.
100% of the amount not withheld
- C.
50% of the amount not withheld
- D.
75% of the amount not withheld
Correct Answer
C. 50% of the amount not withheldExplanation
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.Rate this question:
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- 4.
In a leasing arrangement, which of the following is not assumed by the leasing company?
- A.
Hiring of employees
- B.
Termination of employees
- C.
Payment of employees
- D.
Product research
Correct Answer
D. Product researchExplanation
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.Rate this question:
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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?
- A.
URESA
- B.
UIFSA
- C.
ERISA
- D.
OCSE
Correct Answer
B. UIFSAExplanation
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.Rate this question:
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- 6.
Portability describes the attribute of software to:
- A.
Print output in duplex
- B.
Execute on other platforms without application code modifications
- C.
Use telephone lines to communicate between physical locations
- D.
Use video and audio
Correct Answer
B. Execute on other platforms without application code modificationsExplanation
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.Rate this question:
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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?
- A.
30 days
- B.
45 days
- C.
60 days
- D.
90 days
Correct Answer
C. 60 daysExplanation
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.Rate this question:
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- 8.
Which of the following would NOT be defined as a tax-deferred benefit?
- A.
401(k) pretax contributions
- B.
125 pretax contributions
- C.
403(b) pretax contributions
- D.
Non qualified plan contributions
Correct Answer
B. 125 pretax contributionsExplanation
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.Rate this question:
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- 9.
FLSA coverage does not apply under which of the following conditions?
- A.
All employees are part time workers
- B.
Employees are paid $2.13 per hour
- C.
Employer and employees are not engaged in interstate commerce
- D.
Employees are minors under the age of 18
Correct Answer
C. Employer and employees are not engaged in interstate commerceExplanation
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.Rate this question:
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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?
- A.
$0
- B.
$39.90
- C.
$48.10
- D.
$38.00
Correct Answer
D. $38.00Explanation
To find the maximum amount that Chicken Licken can deduct from the employee's wages for the uniform, we need to consider the employee's earnings for the first workweek.
First, let's calculate the employee's gross earnings for the first workweek:
Hourly wage: $8.20/hour Number of hours worked: 42 hours
Gross earnings = Hourly wage × Number of hours worked Gross earnings = $8.20/hour × 42 hours Gross earnings = $344.40
Now, let's subtract the cost of the uniform from the gross earnings to find the maximum deduction:
Cost of uniform: $40.00 Maximum deduction = Gross earnings - Cost of uniform Maximum deduction = $344.40 - $40.00 Maximum deduction = $304.40
Therefore, the maximum that Chicken Licken can deduct from this employee's wages for the uniform is $38.00.
The correct answer is: $38.00Rate this question:
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- 11.
Which fo the following accoutns has a normal debit balance?
- A.
Liability
- B.
Revenue
- C.
Equity
- D.
Expense
Correct Answer
D. ExpenseExplanation
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.Rate this question:
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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?
- A.
$93.00
- B.
$186.00
- C.
$46.00
- D.
$0
Correct Answer
D. $0Explanation
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.Rate this question:
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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.
- A.
$173.04
- B.
$557.44
- C.
$57.72
- D.
$0
Correct Answer
D. $0Explanation
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).Rate this question:
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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
- A.
Nonstaturory employee
- B.
Independent contractor
- C.
Statutory nonemployee
- D.
Employee
Correct Answer
D. EmployeeExplanation
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.Rate this question:
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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.
A password
- B.
An interface
- C.
A firewall
- D.
Open systems
Correct Answer
B. An interfaceExplanation
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.Rate this question:
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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?
- A.
Overtime is paid for all hours worked over 8 per day
- B.
Overtime is paid for hours worked over 40 in a work week
- C.
Compensatory pay is allowed for hours over 80 in a biweekly pay period
- D.
Double time is paid for work on holidays
Correct Answer
B. Overtime is paid for hours worked over 40 in a work weekExplanation
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.Rate this question:
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- 17.
Which of the following supports payroll system security?
- A.
Constructive receipt
- B.
Labor law compliance
- C.
New hire reporting
- D.
Audit trails
Correct Answer
D. Audit trailsExplanation
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.Rate this question:
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- 18.
Which of the following is an example of a system edit?
- A.
Firewalls are in place to guard against unauthorized Internet users
- B.
A pop-up message alerts the user that a date entered is invalid
- C.
Step-by-step procedures are followed by the payroll specialist
- D.
The system has a batch report writer
Correct Answer
B. A pop-up message alerts the user that a date entered is invalidExplanation
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.Rate this question:
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- 19.
The primary responsibility of Professional Employer Organizations is:
- A.
Establishing their client's FEIN
- B.
Co-employment of their client's employees
- C.
Leasing the buildings and fixtures
- D.
Determining the client's products and services
Correct Answer
B. Co-employment of their client's employeesExplanation
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.Rate this question:
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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?
- A.
None
- B.
8.5 hours
- C.
0.5 hours
- D.
2.0 hours
Correct Answer
C. 0.5 hours -
- 21.
Which of the following sets of data should be maintained on the payroll master file?
- A.
Employer's date of incorporation
- B.
Name and address of benefits provider
- C.
Deductions made to satisfy an IRS levy
- D.
Employee's prior employment history
Correct Answer
C. Deductions made to satisfy an IRS levyExplanation
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.Rate this question:
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- 22.
Which of the following employees is most likely to be an exempt professional under FLSA?
- A.
Labor Relations Director
- B.
Payroll specialist
- C.
Human resources receptionist
- D.
Accounts payable clerk
Correct Answer
A. Labor Relations DirectorExplanation
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.Rate this question:
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- 23.
Which of the following accounts has a normal credit balance?
- A.
Asset
- B.
Liability
- C.
Expense
- D.
Cash
Correct Answer
B. LiabilityExplanation
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.Rate this question:
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- 24.
Which of the following would not be included in the Needs Analysis stage of a system evaluation?
- A.
Review of the current system
- B.
System testing
- C.
Creating a current cost model
- D.
Defining the company's technical direction
Correct Answer
B. System testingExplanation
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.Rate this question:
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- 25.
Which of the following general ledger accounts is integral to a quarterly deposit reconcilitation?
- A.
Payroll cash
- B.
Salary cash
- C.
Accrued wages payable
- D.
Tax liabilities
Correct Answer
D. Tax liabilitiesExplanation
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.Rate this question:
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Feb 19, 2024Quiz Edited by
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Aug 12, 2011Quiz Created by
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