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CPP Exam Practice Questions: Payroll Regulations and Compliance, Exams of Business Economics

London Institute of Business and Technology (LIBT)Business Economics

Practice exam questions for the cpp (certified payroll professional) exam for fall 2024. It covers topics such as federal unemployment tax (futa), social security and medicare taxation, flsa regulations, form w-4, tip reporting (form 4070), disposable earnings, federal tax levies, and financial statements. The questions address minimum wage, overtime pay, bonus calculations, and independent contractor classifications. It also includes questions about tax withholding, wage garnishments, and payroll system design, providing a comprehensive review of payroll-related topics. Useful for students and professionals preparing for payroll certification exams, offering practical insights into payroll calculations and compliance.

Typology: Exams

2024/2025

Available from 05/21/2025

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CPP - Certified Payroll Professional fall 2024 practice exam questions
form 940 correct answer Employer's Annual federal unemployment tax return -
FUTA (act)
How, if at all, are payments made to employees during absence from work due to illness under
their employer's sick pay/disability plan treated for social security and Medicare taxation?
correct answer Social Security and Medicare taxable for the first 6 calendar months
Under the FLSA, all of the following payments are included in the regular rate of pay: correct
answer Remuneration paid employees / pay period paid
Salaries, commissions, bonuses
Room and board provided by employer
To qualify as an executive exempt from the minimum wage and overtime requirements of the
FLSA, what must the employee's responsibilities include? Payroll Source Section 2.4-1 correct
answer Manage 2 or more full-time equivalent employees
When must an employee file a new Form W-4 in 2024 to continue exempt status from 2023?
The Payroll Source Section 6.3-1 correct answer February 15
5. What is the minimum a nonexempt employee must be paid under the FLSA when the
employee is paid $8.00 per hour for the first 30 hours of work and $10.00 per hour for the next
20 hours of work in a workweek?
The Payroll Source Section 2.6-4 correct answer weighted avg = all differing job pay rates / total
hours all jobs
[($8x30)+($10x20)] / 50 = $8.8 reg, $13.20 ot
then: ($8.8x40)+($13.2x10) = $484
$484
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Download CPP Exam Practice Questions: Payroll Regulations and Compliance and more Exams Business Economics in PDF only on Docsity!

CPP - Certified Payroll Professional fall 2024 practice exam questions

form 940 correct answer Employer's Annual federal unemployment tax return - FUTA (act) How, if at all, are payments made to employees during absence from work due to illness under their employer's sick pay/disability plan treated for social security and Medicare taxation? correct answer Social Security and Medicare taxable for the first 6 calendar months Under the FLSA, all of the following payments are included in the regular rate of pay: correct answer Remuneration paid employees / pay period paid Salaries, commissions, bonuses Room and board provided by employer To qualify as an executive exempt from the minimum wage and overtime requirements of the FLSA, what must the employee's responsibilities include? Payroll Source Section 2.4-1 correct answer Manage 2 or more full-time equivalent employees When must an employee file a new Form W-4 in 2024 to continue exempt status from 2023? The Payroll Source Section 6.3-1 correct answer February 15

  1. What is the minimum a nonexempt employee must be paid under the FLSA when the employee is paid $8.00 per hour for the first 30 hours of work and $10.00 per hour for the next 20 hours of work in a workweek? The Payroll Source Section 2.6-4 correct answer weighted avg = all differing job pay rates / total hours all jobs [($8x30)+($10x20)] / 50 = $8.8 reg, $13.20 ot then: ($8.8x40)+($13.2x10) = $ $
  1. What form may employees receiving $20.00 or more in tips per month use to report the tips to their employer? The Payroll Source Section 3.4-27 correct answer Form 4070, Employee's Report of Tips to Employer what does FLSA regulate? CROME mnemonic correct answer Child Labor Record Keeping Overtime Pay Minimum Wage Equal Pay to use the optional flat rate for federal income tax withholding from a supplemental wage payment, how must supplemental wage payments be treated? The Payroll Source Section 6.4-4 correct answer supplemental wages must be identified separately. paid at same time as regular wage payment. 22% flat rate
  2. What are disposable earnings? The Payroll Source Section 9.1-2 correct answer net pay. Earnings remaining after withholding for income taxes and other amounts required by law (voluntary deductions / union fees don't count)
  3. What must a nonexempt employee be paid under the FLSA if the employee is paid $10. per hour, works 40 hours in a workweek, and is paid 8 hours for a holiday in accordance with company policy? The Payroll Source Section 2.6-3 correct answer $ $10x40 = 400
  1. If the state law requires a minimum wage of $8.00 per hour, but the FLSA requires $7.25, what hourly minimum wage must be paid to employees who are covered by both state law and the FLSA? The Payroll Source Section 2.2 correct answer $8 - higher state law min wage takes priority
  2. An employee who is paid $15.00 per hour works a 43-hour week. The employee has a 2019 Form W-4 on-file claiming married with 3 withholding allowances, is paid weekly, and has no voluntary or required deductions other than withholding taxes. The employee has year-to-date wages of $25,000.00 and lives and works in a state with no state income tax. Using Publication 15-T, Worksheet 5, Percentage Method Tables for Manual Payroll Systems With Forms W- From 2019 or Earlier, calculate the employee's net pay. The Payroll Source Section 2.6-3 & 6.4-1 correct answer net pay s/b $605. gross $667.50, tax deducted was $61. priority of garnishment orders, if multiple orders received on one employee? The Payroll Source Section 9.1-1, 9.1-2 & 9.1-3 correct answer priority: 1st federal tax garnish or child support iwo, whichever is issued first (uncle sam hates kids lmao) 2nd other garnishments maximum wages for social security tax withholding? The Payroll Source Section 6.7-2 correct answer $168, stop holding after that amount
  3. What action must occur for the employer to correctly designate a worker as an independent contractor? The Payroll Source Section 1.2-

Certification Examination Content Outline Section IA correct answer passes common law test for employee vs contractor vibe check

  1. Payments made by a business to non-corporate independent contractors for services rendered must be reported to the IRS when the payments exceed: The Payroll Source Section 8.12-1 correct answer $600 in a calendar year (jan to dec)
  2. In February 2024, a federal tax levy is received with the employee claiming married filing jointly with two dependents on Form 668-W. The employee's biweekly gross pay is $2,500.00, and the employee has a 2021 Form W-4 on file indicating a filing status of married filing jointly and $2,000 entered in Step 3. The employee has no other voluntary or involuntary deductions from pay and is not subject to state income tax. Using Publication 15-T, Worksheet 2, Wage Bracket Method Tables for Manual Payroll Systems With Forms W-4 From 2020 of Later, what amount, if any, must be paid to the IRS biweekly for the federal tax levy? The Payroll Source Section 9.1-1 correct answer $730. lol thats like 30%
  3. What financial statement presents the financial position of a business entity by summarizing assets, liabilities, and owner's equity? The Payroll Source Section 11.7-1 correct answer balance sheet ALOE assets = liabilities + owner equity
  4. All of the following duties would be included in the job description of an employee working in the payroll department except: The Payroll Source Section 13.2-2 correct answer bank rec of payroll bank acct

The Payroll Source Section 3.3-1 correct answer c. Value of group-term life insurance over $50,000.

  1. Who, if anyone, is liable if an employer fails to respond to an IRS tax levy against an employee's wages? The Payroll Source Section 9.1-1 correct answer a. Employer only
  2. An employee whose year-to-date wages are $60,000.00 receives a net bonus check of $100.00. The employee is not subject to state income tax. Using the supplemental optional flat rate, calculate the gross amount of the employee's bonus payment. The Payroll Source Section 3.4-11 correct answer b. $142.15 - gross up
  3. In which of the following situations may an employee claim to be exempt from federal income tax withholding on Form W-4? The Payroll Source Section 6.3-1 correct answer d. Employee did not incur tax liability in the preceding year and does not expect to incur tax liability in the current year main areas regulated by the Fair Labor Standards Act? The Payroll Source Section 2.1 - CROME mnemonic correct answer Child labor Record keeping Overtime Minimum wage Equal pay
  4. What tax withholding, if any, is required when unpaid wages due an employee at death are paid to the employee's estate in a calendar year subsequent to the employee's death? The Payroll Source Section 3.4-30 correct answer d. No tax withholding is required
  5. Which of the following payments is subject to social security tax?

The Payroll Source Section 3.4- a. Workers' compensation benefit b. Wages paid in the year after the worker's death c. Payments to ministers of churches performing duties as such d. A back pay award as part of a settlement of a suit for unpaid overtime pay correct answer d. A back pay award as part of a settlement of a suit for unpaid overtime pay

  1. All of the following payments are subject to social security tax except: The Payroll Source Section 4.3- a. Dismissal payments b. Tips exceeding $20.00 per month c. Employee's elective deferral to a 401(k) plan d. Sick-leave payments after six calendar months of absence from work correct answer d. Sick- leave payments after six calendar months of absence from work
  2. What is the penalty for failure to file Form W-2 electronically when required? The Payroll Source Section 8.13 correct answer d. Penalty is dependent upon number of days correctly filed W-2s are late
  3. Under the principles of double entry bookkeeping, what does a credit to an account signify? The Payroll Source Section 11.1-2 correct answer An increase in a liability account liability = CR primary account asset = DR primary acct
  4. What is the purpose of an accrual? The Payroll Source Section 11.5 correct answer d. To assign revenue and expenses to the period in which they are earned or incurred
  5. Each of the following transactions is recorded as an expense except:

The Payroll Source Section 4.5-8 correct answer a. Social Security and Medicare taxes, FIT, and FUTA only (state taxes usually not exempt)

  1. What is the maximum FUTA tax wage base per employee? The Payroll Source Section 7.1-4 correct answer a. $7,000.
  2. On which form are payments to independent contractors reported to the IRS? The Payroll Source Section 8.12-1 correct answer b. 1099-NEC
  3. When must taxes advanced by an employer on behalf of employees during a calendar year be recovered so that the amount advanced is not included in the employee's income for the year? The Payroll Source Section 3.4-1 correct answer d. April 1 of the following calendar year
  4. All of the following accounts are asset accounts except: The Payroll Source Section 11.1-1 correct answer d. Accounts Payable
  5. Which of the following workers would be considered an independent contractor? The Payroll Source Section 1.2-1 correct answer c. A lecturer who is paid a percentage of the money collected at fund raisers when speaking on behalf of a nonprofit clinic
  6. All of the following benefits are taxable compensation except: The Payroll Source Section 3.2-1 correct answer c. Business use of a company car
  7. What is the maximum elective deferral to a 401(k) plan during 2024 by an employee under 50 years of age which is not included in federal gross income? The Payroll Source Section 4.6-1 correct answer b. $23,000.
  1. Which of the following deductions from an employee's pay has the highest priority? The Payroll Source Section 9.1-2 correct answer b. Child support federal tax levy - depends on whether css or tax order was issued first
  2. What amount would be included in the employee's income when the employer chooses to pay the taxes on a bonus of $800.00 and to use the supplemental optional flat rate for calculating the federal income tax? The employee's year-to-date earnings are $17,500.00 and the employee is not subject to any state income tax. The Payroll Source Section 3.4-11 correct answer c. $1,137.
  3. Documents relating to federal income, social security and federal unemployment taxes must be retained for a minimum of: The Payroll Source Section 10.2 correct answer c. 4 years
  4. Which of the following requirements regulates the handling of unclaimed wages? The Payroll Source Section 5.5 correct answer b. State escheat laws
  5. What is the federal minimum wage as of January 1, 2024? correct answer d. $7.25 per hour
  6. Under what law are employers required to extend health care coverage to terminated employees? The Payroll Source Section 4.1-5 correct answer d. COBRA '
  7. Business expense advances not spent, but which are part of an accountable plan, must be returned to the employer within how many days to avoid taxation? The Payroll Source Section 3.3-5 correct answer a. Within 120 days after the expenses were incurred 4 months

JE's

  1. If a company closes its books on March 31, which of the following statements is true? The Payroll Source Section 11.4 correct answer c. The company's fiscal year is April 1 to March
  3. For 2024, at what rate is social security tax withheld from an employee's wages? The Payroll Source Section 6.7-1 correct answer c. 6.2% employeee 6. employer 6.2 = 12.4 total pd by employer (pays ee's behalf)
  4. What is the program that allows for the exchange of information between two computer systems? The Payroll Source Section 12.2 correct answer b. Interface
  5. Which of the following procedures is the best internal control procedure? The Payroll Source Section 11.8 correct answer c. Payroll checks are signed and sealed by the cash management department
  6. Which basic management skill focuses on communicating with top management? The Payroll Source Section 13.2-5 correct answer c. Reporting
  7. What is the IRS definition of wages? The Payroll Source Section 3.1 correct answer c. Compensation received for services rendered
  8. Which facts qualifies an employee for executive exemption? The Payroll Source Section 2.4-1 correct answer hire or fire others

manage 2+ employees / the company paid a salary of at least $684 per week

  1. Employers must provide Form W-2 to employees no later than: The Payroll Source Section 8.8-1 correct answer b. January 31 Form 941 correct answer Employer's Quarterly Federal Tax Return - FIT, soc sec, medicare tax
  2. What are the maximum earnings, if any, subject to Medicare tax? The Payroll Source Section 6.7-2 correct answer no limit (different base from soc sec)
  3. For federal tax purposes, what is the minimum retention period for records when the employer does not claim a refund, credit, or abatement? The Payroll Source Section 10.2 correct answer a. 4 years from the due date of the return or the date the tax is paid, whichever is later acceptable formats for storing records The Payroll Source Section 10.8-3 correct answer a. Paper b. Micromedia c. Computer media all ok - actually reporting is different (usually electronic)
  4. Under the management theory of situational leadership, under which management style would a manager be likely to control the job and the procedures while relying on personal communication with employees to coach them in performing the job? correct answer a. High task/high relationship
  5. All of the following skills are management skills except:

The Payroll Source Section 4.6-1 correct answer c. A plan in which employees are promised a certain level of benefits

  1. What is a defined contribution pension plan? The Payroll Source Section 4.6-1 correct answer a. A plan in which benefits are based upon employee and/or employer contributions
  2. A profit sharing pension plan is what type of pension plan? The Payroll Source Section 4.6-1 correct answer b. Defined Contribution Plan
  3. A governmental educational institution may offer qualified deferred compensation under what section of the Internal Revenue Code? The Payroll Source Section 4.6-3 correct answer b. 403(b)
  4. An employee who is provided a new company car in 2024, which is available for personal use and has a fair market value that does not exceed $62,000.00, may value the personal use under what method? The Payroll Source Section 3.2-2 correct answer c. Annual lease value
  5. All of the following items of information are needed to calculate the value of group-term life insurance except: The Payroll Source Section 3.3-1 correct answer b. Employer's cost of the group-term life insurance
  6. Which of the following requirements determines how soon employees must be paid after a pay period ends? The Payroll Source Section 5.1 correct answer c. State law
  7. What may employers require when implementing direct deposit?

The Payroll Source Section 5.3-2 correct answer a. That participating employees authorize the deposit

  1. What is the monthly maximum amount of employer-provided parking that is excluded from income as a qualified transportation fringe benefit? The Payroll Source Section 3.2-1 correct answer d. $315.
  2. An employer provides an employee with the ability to use a company vanpool to come to work. How much is the value of each trip? The Payroll Source Section 3.2-2 correct answer b. $1.