CPP Practice Exam 7
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 is an example of a system edit?
- A.
An on-line message alerts the user that a 401(k) deduction percent higher than the company allows was entered.
- B.
The payroll specialist re-enters an employee's ZIP code
- C.
A special panel or screen is used to input corrections
- D.
The system has an on-line report writer
Correct Answer
A. An on-line message alerts the user that a 401(k) deduction percent higher than the company allows was entered.Explanation
An example of a system edit is when an on-line message alerts the user that a 401(k) deduction percent higher than the company allows was entered. This indicates that the system is programmed to detect and notify the user when certain inputs do not meet the predefined criteria or rules set by the company. In this case, the system identifies that the entered deduction percent exceeds the allowed limit and prompts the user to make the necessary correction.Rate this question:
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- 2.
One of the employees of the Great Company called to report to the payroll department that his payroll check was incorrect. Which of the following is the most appropriate response or action for the payroll department representative who spoke to the caller?
- A.
Explain that due to the intense schedule under which payroll operates, someone will look into the problem before the next regular payday and make an adjustment at that time if one is warranted.
- B.
Record the caller's name and telephone number and promise to call him back as soon as time permits
- C.
Record the caller's name, employee number and telephone number, his analysis of the payroll check, including the reasons he believes his paycheck is incorrect, and provide a time and date for returning his call with a response to his inquiry.
- D.
Acknowledge immediately that a mistake is likely and assure the caller an adjustment will be processed the same day
Correct Answer
C. Record the caller's name, employee number and telephone number, his analysis of the payroll check, including the reasons he believes his paycheck is incorrect, and provide a time and date for returning his call with a response to his inquiry.Explanation
The most appropriate response or action for the payroll department representative is to record the caller's name, employee number, and telephone number. They should also ask the caller to provide an analysis of the payroll check, including the reasons they believe it is incorrect. The representative should then provide a specific time and date for returning the call with a response to the inquiry. This ensures that all necessary information is collected and that the caller's concerns will be addressed in a timely manner.Rate this question:
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- 3.
Flawless Flower Shops accepts payments for flowers and local delivery from customers anywhere in the United States. The employees of Flawless typically work 6 days a week. How must they be compensated?
- A.
Overtime must be paid on a daily basis
- B.
Overitme is due for hours worked over 40 in a workweek
- C.
Compensatory pay is allowed for hours over 80 in a biweekly pay period
- D.
Double time is required for work on holidays
Correct Answer
B. Overitme is due for hours worked over 40 in a workweekExplanation
The employees of Flawless Flower Shops must be compensated with overtime pay for any hours worked over 40 in a workweek. This means that if an employee works more than 40 hours in a single week, they are entitled to receive additional pay for those extra hours. However, the answer does not mention any specific payment rate or calculation for the overtime pay.Rate this question:
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- 4.
Use of which of the following contributes to the security of the payroll system?
- A.
Field level access restriction
- B.
Reversal entry
- C.
Aggregate withholding
- D.
Quality program
Correct Answer
A. Field level access restrictionExplanation
Field level access restriction contributes to the security of the payroll system by limiting the access and control over sensitive data at a granular level. It ensures that only authorized individuals have the ability to view, modify, or delete specific fields within the system. This helps prevent unauthorized access, data breaches, and potential misuse of payroll information, thereby enhancing the overall security and confidentiality of the payroll system.Rate this question:
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- 5.
Which of the following agencies would most likely enforce rules governing the number of days following the close of the payroll period that employees must be paid?
- A.
Social Security Administration
- B.
Internal Revenue Service
- C.
State workers' compensation board
- D.
State labor department
Correct Answer
D. State labor departmentExplanation
The State labor department would most likely enforce rules governing the number of days following the close of the payroll period that employees must be paid. This is because the State labor department is responsible for overseeing and enforcing labor laws and regulations within the state, including those related to employee wages and payment. They would ensure that employers comply with the requirement to pay employees within a specified timeframe after the payroll period ends.Rate this question:
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- 6.
For IRS purposes, the payroll register should be retained for a period of not less than how many years?
- A.
3
- B.
4
- C.
2
- D.
11
Correct Answer
B. 4Explanation
The correct answer is 4. The payroll register should be retained for a period of not less than four years for IRS purposes. This is because the IRS requires employers to keep records of their payroll for a certain period of time in order to ensure compliance with tax laws and regulations. By keeping the payroll register for at least four years, employers can provide documentation and evidence of their payroll activities if requested by the IRS for audits or investigations.Rate this question:
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- 7.
Form 5500 reporting would be required for which of the following stock plans?
- A.
NSO (nonincentive stock option)
- B.
ISO (incentive stock option)
- C.
Restricted stock
- D.
ESOP (employee stock ownership plan)
Correct Answer
D. ESOP (employee stock ownership plan)Explanation
Form 5500 reporting is required for ESOPs (employee stock ownership plans). This is because ESOPs are retirement plans that invest primarily in employer stock, and they are subject to certain reporting and disclosure requirements under the Employee Retirement Income Security Act (ERISA). The other stock plans mentioned, such as NSOs (nonincentive stock options), ISOs (incentive stock options), and restricted stock, do not typically require Form 5500 reporting as they are not considered retirement plans under ERISA.Rate this question:
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- 8.
In 2009, an on-line payroll system alerts the payroll specialist entering data that an employee has a birthdate fo 1996 or after. What might this indicate?
- A.
Employee is exempt from federal income tax
- B.
Employee may have been hired in violation of child labor laws
- C.
The employer may be able to suspend deductions of Social Security and Meidcare
- D.
A special Form W-4 is required each year for that employee
Correct Answer
B. Employee may have been hired in violation of child labor lawsExplanation
The correct answer suggests that the online payroll system alerts the payroll specialist when an employee has a birthdate of 1996 or after. This indicates that the employee may have been hired in violation of child labor laws, as individuals born in 1996 or after would be under the legal working age in most jurisdictions.Rate this question:
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- 9.
The rate of withholding in 2009 on qualified pension distributions made directly to employees is:
- A.
20%
- B.
30%
- C.
27%
- D.
15%
Correct Answer
A. 20%Explanation
The correct answer is 20%. This means that in 2009, the rate of withholding on qualified pension distributions made directly to employees was 20%. This implies that when employees received their pension distributions, 20% of the amount was withheld for taxes.Rate this question:
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- 10.
A service company sends employees overseas on assignments that last no more than 4 months at a time. Which of the following is true with respect to the taxation of those employees?
- A.
They qualify for an income tax exemption under the "physical presence test"
- B.
The are subject to U.S. Taxation on their pay only while in the United States
- C.
They qualify for an income tax exclusion under the "bona fide residence test"
- D.
They are subject to U.S. taxation on their pay for the time in and out of the country
Correct Answer
D. They are subject to U.S. taxation on their pay for the time in and out of the countryExplanation
The correct answer is that employees are subject to U.S. taxation on their pay for the time in and out of the country. This means that even when they are overseas on assignments, they are still required to pay taxes to the U.S. government on their income. The fact that the assignments last no more than 4 months does not exempt them from this taxation.Rate this question:
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- 11.
Under the FLSA, which of the following restrictions apply when hiring minors under the age 18?
- A.
They are not subject to overtime
- B.
Social Security and Medicare are not deducted for the first 90 days
- C.
Work cannot be performed pursuant to jobs considered hazardous by the U.S. Department of Labor
- D.
If the employees do not have drivers' licenses, the employer may not hire them
Correct Answer
C. Work cannot be performed pursuant to jobs considered hazardous by the U.S. Department of LaborExplanation
Minors under the age of 18 are restricted from performing jobs that are considered hazardous by the U.S. Department of Labor. This means that certain types of work, such as operating heavy machinery or working with dangerous chemicals, are not allowed for individuals under 18 years old. This restriction is in place to protect the safety and well-being of young workers.Rate this question:
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- 12.
Which of the following would not be included in the job description of a payroll specialist?
- A.
Entering direct deposit information
- B.
Crafting policy for employee benefits
- C.
Calculating bonus and severance pay
- D.
Sorting checks and deposit statements for distribution
Correct Answer
B. Crafting policy for employee benefitsExplanation
Crafting policy for employee benefits would not be included in the job description of a payroll specialist because their main responsibility is to ensure accurate and timely payment of employees' wages. Crafting policy for employee benefits falls under the domain of HR or benefits specialists who focus on designing and implementing employee benefit programs.Rate this question:
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- 13.
Which fo the following statements is true?
- A.
A company's fiscal year must be the same as the calander year
- B.
A company may designate its fiscal year to cover 12 months that differ from the calendar year
- C.
A company's fiscal year must not be the same as the calendar year
- D.
A company must produce Forms W-2 at the end of its fiscal year regardless of the calendar
Correct Answer
B. A company may designate its fiscal year to cover 12 months that differ from the calendar yearExplanation
A company may designate its fiscal year to cover 12 months that differ from the calendar year. This means that a company is not required to align its fiscal year with the calendar year and has the flexibility to choose a different 12-month period for financial reporting purposes.Rate this question:
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- 14.
The term used to describe the breaking away from traditional theories and perceptions is:
- A.
Pygmalion effect
- B.
Paradigm shift
- C.
Doctrinaire approach
- D.
Cognitive deviation
Correct Answer
B. Paradigm shiftExplanation
A paradigm shift refers to the process of abandoning traditional theories and perceptions in favor of new ones. It involves a fundamental change in the way people think and understand a particular subject or concept. This term is often used to describe a significant transformation in scientific or philosophical theories that challenge established beliefs and lead to a new understanding of the world.Rate this question:
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- 15.
The entry to record a salary advance to an employee is:
- A.
Debit accounts receivable, credit cash
- B.
Debit salary expense, credit cash
- C.
Debit salary expense, credit wages payable
- D.
Debit cash, credit accounts receivable
Correct Answer
A. Debit accounts receivable, credit cashExplanation
The correct answer is to debit accounts receivable and credit cash. This entry is made when an employee receives an advance on their salary. By debiting accounts receivable, it reflects that the employee owes the company for the advance, and by crediting cash, it shows that the company has paid out the advance amount. This entry does not involve salary expense or wages payable, as those accounts would be used when recording the actual payment of the employee's salary.Rate this question:
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- 16.
The entry to record an employee's repayment of a salary advance is (salary advance is deducted on a pretax basis from regular wages):
- A.
Debit cash, credit salary expense
- B.
Debit salary expense, credit accounts receivable
- C.
Debit salary expense, credit wages payable
- D.
Debit accounts receivable, credit cash
Correct Answer
B. Debit salary expense, credit accounts receivableExplanation
When an employee repays a salary advance, it is recorded as a decrease in the salary expense because the amount is being returned. The accounts receivable is credited because the employee is repaying the advance, which was initially recorded as an increase in accounts receivable. This entry reflects the reversal of the initial entry made when the salary advance was given.Rate this question:
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- 17.
The entry to recored an employee's repayment of a salary advance is (employee repays advance by personl check):
- A.
Debit accounts receivable, credit cash
- B.
Debit salary expense, credit accounts receivable
- C.
Debit cash, credit accounts receivable
- D.
Debit accounts receivable, credit cash
Correct Answer
C. Debit cash, credit accounts receivableExplanation
The correct answer is to debit cash and credit accounts receivable because when the employee repays the salary advance with a personal check, it increases the cash balance (debit) and decreases the accounts receivable balance (credit) as the outstanding amount is being paid off.Rate this question:
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- 18.
The entry to record an employee's repayment of a salary advance is (employee repays advance by personal check):
- A.
Debit accounts receivable, credit cash
- B.
Debit salary expense, credit accounts receivable
- C.
Debit cash, credit accounts receivable
- D.
Debit cash, credit wages payable
Correct Answer
C. Debit cash, credit accounts receivableExplanation
When an employee repays a salary advance by personal check, the company receives cash from the employee. Therefore, the company should debit cash to record the increase in cash and credit accounts receivable to reduce the amount owed by the employee. This entry reflects the repayment of the advance and updates the company's financial records accurately.Rate this question:
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- 19.
The final due date for the second quarter Form 941, assuming that the employer paid all taxes on time is:
- A.
July 10
- B.
June 30
- C.
July 31
- D.
August 10
Correct Answer
D. August 10Explanation
Form 941 is a quarterly tax form that employers use to report income taxes, social security tax, or Medicare tax withheld from employee’s paychecks. It also reports the employer’s portion of social security or Medicare tax.
The due dates for each quarter are as follows:
Q1 (January, February, March): Due by April 30
Q2 (April, May, June): Due by July 31
Q3 (July, August, September): Due by October 31
Q4 (October, November, December): Due by January 31
However, if you made deposits on time and in full payment of your taxes for the quarter, you have 10 more days after the due date to file Form 941. So, for the second quarter (April, May, June), if all taxes were paid on time, the final due date for Form 941 is August 10.
If the taxes have not been deposited on time and in full, the deadline remains July 31.Rate this question:
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- 20.
Federal tax withheld from a distribution of $50,000 from a qualified retirement plan paid directly to a retiree age 65 is:
- A.
$0
- B.
$14,000
- C.
$15,500
- D.
$10, 000
Correct Answer
D. $10, 000Explanation
The correct answer is $10,000. This is because federal tax is withheld from distributions from qualified retirement plans, and the amount withheld is based on the retiree's age and the amount of the distribution. In this case, the retiree is 65 years old and the distribution is $50,000, so $10,000 is withheld for federal taxes.Rate this question:
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- 21.
A cross-functional work team is an important element of:
- A.
Claim of right
- B.
Business process reengineering
- C.
Management by objective
- D.
Benchmarking
Correct Answer
B. Business process reengineeringExplanation
A cross-functional work team is an important element of business process reengineering. Business process reengineering involves redesigning and improving business processes to achieve better efficiency, productivity, and quality. A cross-functional work team consists of individuals from different departments or areas of expertise who come together to collaborate and work towards a common goal. In the context of business process reengineering, a cross-functional work team is crucial as it brings together diverse perspectives and knowledge to identify and eliminate inefficiencies in existing processes, and to design and implement new and improved processes.Rate this question:
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- 22.
Which of the following is a reasonable approach when discussing an employee's poor performance?
- A.
Raise the issues during the next departmental meeting
- B.
Assign additional responsibilities
- C.
Provide examples of the performance issues
- D.
Delegate the discussion to one of the employee's peers
Correct Answer
C. Provide examples of the performance issuesExplanation
Providing examples of the performance issues is a reasonable approach when discussing an employee's poor performance because it allows for clear communication and understanding of the areas that need improvement. By providing specific examples, the employee can better comprehend the issues at hand and work towards addressing them effectively. This approach also helps in avoiding generalizations and ensures that the feedback is constructive and actionable.Rate this question:
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- 23.
Which of the following is the most logical order of events in a system implementation?
- A.
Conversation, training, testing, evaluation
- B.
Feasibility, evaluation, developement, testing
- C.
Testing, evaluation, training, documentation
- D.
Training, development, testing evaluation
Correct Answer
B. Feasibility, evaluation, developement, testingExplanation
The most logical order of events in a system implementation is to first assess the feasibility of the project, then conduct an evaluation to determine the specific requirements and goals. After that, the development phase can begin, followed by testing to ensure the system functions properly. Therefore, the correct order is feasibility, evaluation, development, and testing.Rate this question:
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- 24.
A statutory employee's pay is subject to which of the following taxes?
- A.
Social Security, Medicare and FUTA
- B.
Federal income tax
- C.
None
- D.
Federal income tax, Social Security, and Medicare
Correct Answer
A. Social Security, Medicare and FUTAExplanation
A statutory employee's pay is subject to Social Security, Medicare, and FUTA taxes. These taxes are deducted from the employee's paycheck to fund various government programs. Social Security taxes fund retirement, disability, and survivor benefits, while Medicare taxes fund healthcare for individuals aged 65 and older. FUTA taxes fund unemployment benefits for workers who have lost their jobs. Therefore, the correct answer is Social Security, Medicare, and FUTA.Rate this question:
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- 25.
An HRIS that has one database with functionality pertaining to multiple applications is often called a(n)
- A.
Stand-alone system
- B.
Segregated system
- C.
Cross-functional system
- D.
Integrated system
Correct Answer
D. Integrated systemExplanation
An HRIS that has one database with functionality pertaining to multiple applications is often called an integrated system. This means that all the different applications within the HRIS are connected and share data in a seamless manner. This integration allows for efficient and effective management of HR processes and information, as it eliminates the need for multiple standalone or segregated systems. With an integrated system, HR professionals can easily access and analyze data from various applications, such as payroll, recruitment, and performance management, in one centralized location.Rate this question:
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Jan 22, 2024Quiz Edited by
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Aug 17, 2011Quiz Created by
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