CPP Practice Exam 6
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.
For purposes of the FLSA, a payroll register must be retained for a period of not less than how many years?
- A.
4
- B.
2
- C.
3
- D.
5
Correct Answer
C. 3Explanation
A payroll register must be retained for a period of not less than three years for purposes of the FLSA. This is important for record-keeping and compliance with the Fair Labor Standards Act (FLSA), which sets standards for minimum wage, overtime pay, and other employment regulations. Retaining the payroll register for at least three years allows for proper documentation and verification of wages paid to employees, ensuring that employers are following the FLSA guidelines.Rate this question:
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- 2.
Under the federal requirements, a restaurant establishme with 10 or more employees is required to report allocated tips if reported tips are less than what percentage of gross receipts?
- A.
8%
- B.
10%
- C.
25%
- D.
6%
Correct Answer
A. 8%Explanation
Under federal requirements, a restaurant establishment with 10 or more employees is required to report allocated tips if the reported tips are less than 8% of the gross receipts. This means that if the total tips reported by employees are less than 8% of the total sales made by the restaurant, the establishment must report and allocate additional tips to meet the 8% requirement. This ensures that the establishment is accurately reporting and allocating tips, which is important for tax purposes and to ensure fair compensation for employees.Rate this question:
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- 3.
The employer must withhold FICA and federal income taxes, and pay FUTA tax, when the employee's tips exceed what amount?
- A.
$50 per month
- B.
$20 per year
- C.
$20 per month
- D.
$50 per year
Correct Answer
C. $20 per monthExplanation
When an employee's tips exceed $20 per month, the employer is required to withhold FICA and federal income taxes, as well as pay FUTA tax. This means that if the employee earns more than $20 in tips in a single month, the employer has the responsibility to deduct the appropriate taxes from the employee's paycheck and contribute to the federal unemployment tax.Rate this question:
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- 4.
Federal unemployment tax must be accrued for which of the following?
- A.
Wages paid to federal employees
- B.
Taxable group-term life
- C.
Tip income under $20 per month
- D.
Deceased worker's final wage payment in year of death
Correct Answer
D. Deceased worker's final wage payment in year of deathExplanation
The federal unemployment tax must be accrued for the deceased worker's final wage payment in the year of their death. This is because the final wage payment is still subject to federal unemployment taxes, even though the worker is deceased.Rate this question:
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- 5.
An employee of a state law enforcement agency worked 45 hours in the workweek. Under FLSA, how much compensatory time off must this employee receive in lieu of overtime pay?
- A.
2.5 hours
- B.
7.5 hours
- C.
5.5 hours
- D.
10.0 hours
Correct Answer
B. 7.5 hoursExplanation
According to the Fair Labor Standards Act (FLSA), employees who work more than 40 hours in a workweek are entitled to receive overtime pay at a rate of 1.5 times their regular hourly rate. However, there is an exception for certain public sector employees who may be eligible to receive compensatory time off instead of overtime pay. In this case, the employee worked 45 hours, which means they worked 5 hours of overtime. Since the FLSA requires that compensatory time off be given at a rate of 1.5 hours for each hour of overtime worked, the employee would be entitled to 7.5 hours of compensatory time off.Rate this question:
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- 6.
Which of the following is not likely to be included in payroll documentation?
- A.
Tax Set Up
- B.
Correcting Errors
- C.
Proofing and Balancing Payroll
- D.
Auditors' Questionnaire
Correct Answer
D. Auditors' QuestionnaireExplanation
The auditors' questionnaire is not likely to be included in payroll documentation because it is a tool used by auditors to gather information and assess the effectiveness of internal controls during an audit. Payroll documentation typically includes records of employee wages, deductions, taxes, and other payroll-related information. Tax set up, correcting errors, and proofing and balancing payroll are all activities that are commonly included in payroll documentation.Rate this question:
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- 7.
The propler entry to record the payment of accrued wages is:
- A.
Debit accrued wages, credit cash
- B.
Debit cash, credit accrued wages
- C.
Debit salary expense, credit accrued wages
- D.
Debit cash, credit salary expense
Correct Answer
A. Debit accrued wages, credit cashExplanation
The correct entry to record the payment of accrued wages is to debit the accrued wages account and credit the cash account. This entry reflects the decrease in the accrued wages liability and the decrease in the cash asset as the payment is made.Rate this question:
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- 8.
In a relational database, a field is represented as :
- A.
A highlighted area of the monitor
- B.
An entry on a row in a table
- C.
A command button on the panel or screen
- D.
An icon on the graphical user interface
Correct Answer
B. An entry on a row in a tableExplanation
In a relational database, a field is represented as an entry on a row in a table. In a table, each row represents a record and each column represents a field. Therefore, a field is a specific piece of data that is stored within a record in a table.Rate this question:
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- 9.
If an employee fails to furnish the employer with a Form W-4, the employer is required to withhold federal income tax at the rate of:
- A.
Married and 0 allowances
- B.
Single and 1 allowance
- C.
Single and 0 allwoances
- D.
Married and 2 allowances
Correct Answer
C. Single and 0 allwoancesExplanation
If an employee fails to furnish the employer with a Form W-4, the employer is required to withhold federal income tax at the rate of Single and 0 allowances. This means that the employee is considered single for tax purposes and has chosen not to claim any allowances, resulting in a higher amount of taxes being withheld from their paycheck.Rate this question:
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- 10.
Under the special accounting rule, employers may treat benefits earned near the end of teh yare as having been earned in the subsequent year for tax and reporting purposes. Benefits for which month(s) may be treated as having been earned in the follwoing tax year?
- A.
December only
- B.
November and December
- C.
The last 3 months of the year
- D.
The last 6 months of the year
Correct Answer
B. November and DecemberExplanation
Under the special accounting rule, benefits earned near the end of the year can be treated as earned in the subsequent year for tax and reporting purposes. Therefore, benefits for the months of November and December may be treated as having been earned in the following tax year.Rate this question:
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- 11.
A plan to ensure business can continue in the event of a flood is called a:
- A.
Strategic business plan
- B.
Disaster recovery plan
- C.
Implementation plan
- D.
Group term life plan
Correct Answer
B. Disaster recovery planExplanation
A disaster recovery plan is a plan that outlines the steps and procedures that a business should follow in the event of a disaster, such as a flood, to ensure that the business can continue operating. It includes measures to minimize downtime, recover critical systems and data, and restore normal operations as quickly as possible. This plan helps to mitigate the impact of the disaster on the business and ensures that essential functions can be resumed promptly.Rate this question:
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- 12.
The FLSA term "exempt" generally means the employer need NOT:
- A.
Withhold federal income tax
- B.
Pay federal income tax
- C.
Pay a minimum amount
- D.
Pay overtime
Correct Answer
D. Pay overtimeExplanation
The FLSA term "exempt" refers to employees who are not eligible for overtime pay. Therefore, the correct answer is that the employer does not need to pay overtime to exempt employees.Rate this question:
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- 13.
A prenotification may be used when an employee:
- A.
Is relocated
- B.
Changes banking institutions
- C.
Loses a paycheck
- D.
Has insufficient funds in a checking account
Correct Answer
B. Changes banking institutionsExplanation
When an employee changes banking institutions, it is necessary to notify the employer in advance. This is because the employer needs to update the employee's direct deposit information and ensure that future paychecks are deposited into the correct account. By providing a prenotification, the employee can inform the employer about the upcoming change and avoid any disruption in receiving their salary.Rate this question:
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- 14.
Which of the following describes the system step needed nearest in time to the start of the processing with a new system?
- A.
Feasibility
- B.
Parallel
- C.
Evaluation
- D.
Needs anaylisis
Correct Answer
B. ParallelExplanation
The term "parallel" refers to a system step that is performed simultaneously with the start of the processing with a new system. This means that the parallel step occurs at the same time or very close to the beginning of the system processing. The other options, such as feasibility, evaluation, and needs analysis, may be important steps in the system development process, but they are not specifically related to the start of processing with a new system.Rate this question:
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- 15.
Which of the following is usually considered an advantage for outsourcing payroll?
- A.
Business decisions transfer to the outsource provider
- B.
Tax withholding updates in the system are the responsibility of the service provider
- C.
The employer is relieved of all compliance responsibility
- D.
All of the business needs can be met with no customizations
Correct Answer
B. Tax withholding updates in the system are the responsibility of the service providerExplanation
Outsourcing payroll can be advantageous because it allows the responsibility of tax withholding updates to be transferred to the service provider. This means that the employer does not have to worry about keeping up with changing tax regulations and updates to the payroll system. This can save time and resources for the employer, allowing them to focus on other aspects of their business. Additionally, by relying on a service provider, the employer can benefit from their expertise and ensure compliance with tax laws and regulations.Rate this question:
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- 16.
Which of the following would probably not require an electronic interface from the payroll/human resources system?
- A.
External audit firm
- B.
401(k) administrator
- C.
Payer of push money
- D.
Originating bank for direct deposit
Correct Answer
C. Payer of push moneyExplanation
A "payer of push money" refers to an entity that provides financial incentives or rewards to individuals or organizations for promoting or selling their products or services. Unlike the other options listed, a payer of push money does not typically require access to the payroll/human resources system. This is because their role is focused on incentivizing sales activities and not directly related to employee compensation or benefits administration. Therefore, they would not require an electronic interface from the payroll/human resources system.Rate this question:
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- 17.
The obligations of the common paymaster include:
- A.
Absorbing the salary expenses for the individuals employed concurrently by the related corporatins
- B.
Deducting from its corporate tax return the salary and wage expenses for all of the individuals employed concurrently by the related corporations
- C.
Depositing and reporting the taxes withheld from the individuals it pays who are concurrently employed by the related corporations
- D.
Absorbing the employer tax expenses for the individuals employed concurrently by the related corporations
Correct Answer
C. Depositing and reporting the taxes withheld from the individuals it pays who are concurrently employed by the related corporationsExplanation
The common paymaster is responsible for depositing and reporting the taxes that are withheld from the individuals it pays who are concurrently employed by the related corporations. This means that when the common paymaster pays the employees, it must also withhold the appropriate taxes from their wages and ensure that these taxes are deposited and reported to the relevant tax authorities. This ensures compliance with tax regulations and helps to fulfill the common paymaster's obligations as an employer.Rate this question:
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- 18.
What is the difference between policy and a procedure?
- A.
None, they serve the same purpose
- B.
Policies are rules; procedures are instructions
- C.
Policies can be overridden; procedures may not
- D.
Procedures need to be documented; policies do not
Correct Answer
B. Policies are rules; procedures are instructionsExplanation
Policies and procedures serve different purposes. Policies are a set of rules that guide decision-making and provide a framework for actions. They outline the principles and guidelines that govern an organization's activities. On the other hand, procedures are step-by-step instructions that detail how to carry out a specific task or activity. They provide a clear and structured approach to completing tasks. Therefore, policies are rules, while procedures are instructions.Rate this question:
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- 19.
Which of the following is most likely to be included in expenses on an organizations's financial statement?
- A.
Company-matched Social Security tax paid to IRS
- B.
Cash
- C.
Wages payable in subsequent month
- D.
Wages payable in subsequent year
Correct Answer
A. Company-matched Social Security tax paid to IRSExplanation
Company-matched Social Security tax paid to IRS is most likely to be included in expenses on an organization's financial statement because it represents an actual payment made by the organization towards employee benefits. This expense is incurred by the organization as a result of matching the Social Security tax contribution made by employees. It is a legitimate expense that needs to be recorded in the financial statement to accurately reflect the organization's financial position and performance.Rate this question:
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- 20.
Which of the following is not a by-product of documentation?
- A.
Consistency
- B.
Simplified training
- C.
Reference material
- D.
Firewall violation prevention
Correct Answer
D. Firewall violation preventionExplanation
Firewall violation prevention is not a by-product of documentation. By-products are unintended or secondary outcomes of a process. Documentation typically leads to consistency, simplified training, and reference material, which are all beneficial outcomes. However, firewall violation prevention is not directly related to documentation and is not typically considered a by-product of the documentation process.Rate this question:
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- 21.
As enhancements direclty for a vendor-supplied software program, a quality assurance step includes:
- A.
Applying the enhancements directly into production as soon as they are recieved
- B.
Executing a test of the new enhancements in parallel with the current processing
- C.
Waiting until several vendor releases or enhancements are received and installing all at the same time
- D.
Conducting telephone interviews with other users of the vendor's software
Correct Answer
B. Executing a test of the new enhancements in parallel with the current processingExplanation
The correct answer is executing a test of the new enhancements in parallel with the current processing. This is a quality assurance step because it allows for the new enhancements to be tested and evaluated before fully implementing them into production. By running the test in parallel with the current processing, any potential issues or conflicts can be identified and resolved before the enhancements are fully deployed. This helps to ensure that the vendor-supplied software program remains stable and functional.Rate this question:
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- 22.
If a company is examinng the feasibility of purchasing an intergrated human resource information system (HRIS), what approach is best?
- A.
Assign the search task to the information systems staff who have prior experience in each HRIS discipline
- B.
Instruct each user area to conduct an independent search for a software vendor
- C.
Assemble a team of information system staff and potential users to conduct the search
- D.
Authorize the company's payroll manager to select the vendors from which to choose
Correct Answer
C. Assemble a team of information system staff and potential users to conduct the searchExplanation
Assembling a team of information system staff and potential users to conduct the search is the best approach when examining the feasibility of purchasing an integrated human resource information system (HRIS). This approach ensures that the search is conducted by a diverse group of individuals who have knowledge and expertise in both information systems and HRIS. By involving potential users, the team can gather input and requirements from different user areas, ensuring that the chosen HRIS meets the needs of the entire organization. This collaborative approach increases the chances of selecting the most suitable HRIS for the company.Rate this question:
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- 23.
The annual "bright-line" salary test to meet the definition of exempt under the FLSA is:
- A.
$100,000
- B.
$50,000
- C.
$90,000
- D.
$45,500
Correct Answer
A. $100,000Explanation
The correct answer is $100,000. The annual "bright-line" salary test refers to the minimum salary threshold that an employee must earn in order to be exempt from overtime pay under the Fair Labor Standards Act (FLSA). In this case, the threshold is $100,000, meaning that employees who earn at least this amount are not entitled to overtime pay regardless of their job duties.Rate this question:
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- 24.
How should a manager provide negative feedback to an employee?
- A.
At a department meeting
- B.
In the privacy of an office or conference room
- C.
Through an email-message
- D.
On a voice-mail
Correct Answer
B. In the privacy of an office or conference roomExplanation
A manager should provide negative feedback to an employee in the privacy of an office or conference room to maintain confidentiality and respect the employee's dignity. This setting allows for a one-on-one conversation, creating a safe space for honest communication and constructive criticism. Providing negative feedback in a public setting, such as a department meeting, can lead to embarrassment and damage the employee's morale. Similarly, using email or voice-mail may lack the personal touch and non-verbal cues necessary for effective feedback.Rate this question:
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- 25.
Which of the following is an example of a system production control technique?
- A.
A check list is created of sequential activities to run the payroll
- B.
Job descriptions are updated as the incumbents of the jobs change
- C.
Forms W-9 are obtained for all independent contractors
- D.
Computers and other hardware are kept in climate controlled rooms
Correct Answer
A. A check list is created of sequential activities to run the payrollExplanation
A check list is created of sequential activities to run the payroll is an example of a system production control technique because it involves creating a step-by-step checklist to ensure that all necessary activities are completed in the correct order for running the payroll. This helps to streamline the process, reduce errors, and ensure that all necessary tasks are completed efficiently and effectively.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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