FPC Payroll Fundamentals: Complete Questions & Answers, Exams of Business Accounting

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FPC Payroll

Fundamentals

Complete Questions &

Answers(RATED A)

Worker that has Fed, OASDI, Medicare, State withheld - ANSWER Employee Worker that requires the employer to pay ER taxes - ANSWER Employee Worker that receives W2 form - ANSWER Employee Worker that does not have taxes withheld - ANSWER Independent Contractor Worker that has TIN - ANSWER Independent Contractor Worker that receives 1099 Form - ANSWER Independent Contractor Asks how independent is the employee and how much control can be exervised over the worker. - ANSWER Common Law Test

A worker cannot sign a new contract stating that they will be an indepndent contractor. - ANSWER Common Law Test Employer has treated similar workers as independent contractors for any period and has filed tax returns

• ANSWER Reasonable Basis Test Longstanding industry standard of treating similar workers as independent contractors - ANSWER Reasonable Basis Test Court decisions for treating workers in similar circumstances as independent contractors - ANSWER Reasonable Basis Test IRS has ruled in a "published ruling" that the workers are indpendent contractors - ANSWER Reasonable Basis Test Temporary Service Provider or Leasing Company - ANSWER Pays employees and taxes instead of company the employee is performing services for Immigration reform and Control Act of 1986 (IRCA) - ANSWER Requires employer to verify employees' eligibility for employment in the US. Penalties for Violating IRCA - ANSWER $375 for the first offence and $16,000 for the third Antidiscrimination under IRCA - ANSWER The law prohibits discrimination in hiring or recruiting workers on the basis of national origin or citizenship Verification of eligitability - ANSWER The burden of verifying that any employee is eligible to work in this country falls on the employer. All employees hired after November 6, 1989 must be verified. When must Section 1 of Form I-9 be completed? - ANSWER The employee's date of hire. When must Section 2 of Form 1-9 be completed? - ANSWER Within three days of hiring the employee.

Form SS-5 - ANSWER Application for a social security card Form I-9 - ANSWER Employment Eligitability Verification Employee SSN verification is... - ANSWER recommended but not required. What information must an employer report for new hires? - ANSWER Name, Date of Hire, Address, SS, Employer's Name, Address, and EIN Fair Labor Standards Act of 1938 (FLSA) - ANSWER Guarantees employees a minimum wage, requires employers to pay an overtime premium, limits when minors can work, and provides equal pay protection. Who is protected by FLSA? - ANSWER Nonexempt employees Minimum weekly salary required for exempt employees - ANSWER $ 4 categories of exempt employees - ANSWER Executives, Administrative Employee, Professional, Outside Sales People Special FLSA provisions exist for... - ANSWER Various transportation workers, agricultural workers, hospital employees, and public sector employees. Automated clearing house (ACH)- - ANSWER An entity which serves as the central agency for processing and transferring funds from one financial institution to another via electronic data transmission. ACHs operate under rules and standards established by the National Automated Clearing House Association (NACHA) Circular E - ANSWER Employer's Tax Guide (IRS Publication 15). The basic IRS reference. Provides explanation and illustration of an employer's federal tax withholding, depositing, and reporting obligations. Circular E provides information relevant to all employers, while Publication 15-A, Employer's Supplemental Tax Guide , is intended to provide additional information required by larger employers.

Disposable earnings - ANSWER That portion of earnings remaining after deductions required by law have been made; used to calculate the maximum amount of an employee's wages subject to garnishment Electronic funds transfer (EFT) - ANSWER The electronic movement of funds from one bank account to another. Direct deposit of employees' paychecks is an example of EFT. Exempt employees - ANSWER Generally, employees who are exempt from the minimum wage and overtime provisions of the Fair Labor Standards Act FICA - ANSWER The Federal Insurance Contributions Act which imposes employer and employee taxes to fund the federal government's old-age, survivors, and disability insurance (OASDI/Social Security) and health insurance (HI/Medicare) trust funds. Gross-up - ANSWER The formula for determining the total taxable gross when the employer pays the employee's share of tax Noncash fringe benefits - ANSWER Benefits paid to employees in a form other than cash (e.g., health insurance, company-provided vehicles, group-term life insurance) Percentage method of withholding- - ANSWER A procedure for calculating the amount of income tax to withhold from wages using mathematical formulas rather than simple tables Premium pay - ANSWER The portion of pay, over and above the regular hourly rate, paid for overtime hours worked. Pretax deduction - ANSWER A deduction from pay that reduces taxable wages W-2 - ANSWER Wage and Tax Statement W-4S - ANSWER Request for Federal Income Tax Withholding From Sick Pay

668-W - ANSWER Notice of Levy on Wages, Salary, and Other Income 941 - ANSWER Employer's Quarterly Federal Tax Return Wage - ANSWER The amount paid to an employee for every hour worked Salary - ANSWER A fixed annual(yearly) sum of money divided among equal pay periods Biweekly - ANSWER employees are paid every two weeks. 26 times a year Accounting Period - ANSWER the period of time covered in an income statement Aggregate method - ANSWER method of withholding federal income tax from supplemental wages in which the supplemental payment is combined with the regular wages paid during the most recent payroll period. Balance sheet - ANSWER a financial statement that presents the business's financial position in terms of assets, liabilities and owner's equity as of a certain date Asset - ANSWER resource acquired by a business that is consumed by the business Employee identification number (EIN) - ANSWER the employer's account number with the Internal Revenue Disposable Earnings - ANSWER the part of the employee's earnings remaining after deductions required by law Customer Service - ANSWER in a payroll environment, customer service consists of reliability, responsiveness, assurance, empathy and tangibles EFTPS - ANSWER Electronic Federal Tax Payment System

Expense Account - ANSWER shows cost for goods and services consumed by the company during an accounting period FUTA - ANSWER Federal Unemployment Tax Act Garnishment - ANSWER a legal proceeding authorizing an involuntary transfer of an employee's wages to a creditor or to satisfy a debt Net Pay - ANSWER the part of the employee's wages that remains after all deductions are subtracted OFDI - ANSWER Originating Depository Financial Institution $7.25 - ANSWER Federal Minimum wage $118,500 - ANSWER Social security tax limit on employee's wages 6.2% - ANSWER 2016 Social Security tax rate 2.35% - ANSWER Medicare for wages over $200K paid by EE only - ER continues to pay 1.45% Federal Rounding rule - ANSWER less than $.50 round down; round up for $.50 or more Direct Deposit - ANSWER the electronic transfer of an employees net pay to a financial institution of their choice CHROME - ANSWER Child Labor Hours Worked Retention Overtime Pay

Minimum Wage Exempt from OAR - ANSWER ODFI- Original financial institution ACH- RDFI- Receiving financial institution CLEAR - ANSWER Capital Credit Liability Credit Expense Debit Assets Debit Revenue Credit Interface - ANSWER the point where two distinct data-processing elements meet Real Time Processing - ANSWER data entered in the system updates records and immediately returns the results Simple Simon Marries Tooth Fairy - ANSWER Saturday, Sunday Monday or Tuesday > deposit Friday Weird Thomas Freezes Worms - ANSWER Wed, Thurs or Fri > deposit Wednesday ADA - ANSWER Americans with Disabilities Act ADEA - ANSWER Age Discrimination in Employment Act After-tax deduction - ANSWER A deduction from an employee's pay that does not reduce the employee's taxable wages. It is taken out only after all applicable taxes and other deductions have been withheld (e.g., union dues, garnishments, charitable contributions).

Escheat - ANSWER In the context of payroll, the turning over of unclaimed wages to the state after a period of time determined by state law. Fluctuating workweek - ANSWER An arrangement between an employer and a nonexempt employee to pay the employee a fixed weekly salary even though the employee's hours may vary from week to week. FPC - ANSWER Fundamentals of Payroll Certification Validity Checks - ANSWER Shows whether or not data entered meets the requirements set forth by a company White Collar Employees - ANSWER In the context of the Federal Wage-Hour Law, executive, administrative, professional (including computer-related professionals), or outside sales employees who are exempt from the law's minimum wage, overtime pay, and certain record-keeping requirements. Worker Classification - ANSWER The process of determining whether an individual performing services for a business is either an employee or an independent contractor Working Condition Fringe - ANSWER Benefits provided to an employee that are required for the employee's job. These benefits are not taxable. De minimis fringe benefit - ANSWER An item provided infrequently by an employer to an employee that is of small value. De minimis fringe benefits are never cash or cash equivalents. Constructive Receipt - ANSWER An IRS rule that considers wages to be received by an employee when the employee has access to the wages without substantial limitation or restriction Batch Processing - ANSWER Processing data as a group, either to increase controls or processing efficiency Common Law Test - ANSWER A test that measures the right to control and direction that an employer has the authority to exercise over a worker. Where the employer has the right to direct the worker as to

how, where, and when the work will be completed, in addition to controlling the result of the work, the worker is a common law employee Discretionary Bonus - ANSWER Bonus paid for services performed. In order to be considered discretionary, the bonus cannot be paid because of a promise made in advance, a contract, or another agreement. GTL - ANSWER Group-term life insurance Gross-Up - ANSWER An IRS-approved formula that employers can use to determine the taxable gross payment when the employer wishes to pay the employee's share of tax. Impute - ANSWER The addition of the value of cash/noncash compensation to an employee's taxable wages in order to properly withhold income and employment taxes from the wages. Independent contractor - ANSWER A nonemployee contracted by a business to perform services. Although the business specifies the result of the work to be performed, it has no right to control the details of when, how, or who will ultimately perform the work Look Back Period - ANSWER The 12-month period running from July 1 of the second preceding calendar year through June 30 of the preceding calendar year. The employer's payroll tax liability during this period determines its depositor status for the current year. The period may be different for some employers Originating Depository Financial Institution (ODFI) - ANSWER A financial institution that is qualified to initiate deposit entries submitted by an employer as part of the direct deposit process. Payroll Register - ANSWER A report listing and summarizing the compensation paid and deductions taken from each employee's wages for the payroll period. Qualified transportation fringe - ANSWER Certain employer-provided transportation benefits that can be excluded from employees' income up to certain annually adjusted limits (i.e., transit passes, van pools, parking, bicycle

Receiving Depository Financial Institution (RDFI) - ANSWER A financial institution that receives direct deposit entries from an automated clearinghouse. Retroactive Pay - ANSWER Pay for time worked in a previous workweek; retroactive pay must be applied to both regular and overtime hours. Segregation of Duties - ANSWER A basic principle of internal control that prevents individuals from having responsibility for all phases of a job process, thus guarding against misuse or misappropriation of company assets Statutory Employees - ANSWER Special groups of employees identified by law (e.g., full-time life insurance salespeople, certain homeworkers) whose wages are not subject to federal income tax withholding but are subject to social security, Medicare, and FUTA taxes Supplemental Wages - ANSWER Compensation received by employees other than their regular pay, such as bonuses, commissions, and severance pay. Income tax may be withheld from such payments at a flat rate under certain circumstances. Tangible - ANSWER Type of asset that includes land and improvements, buildings, computers and software, furniture, and automobiles Tip Credit - ANSWER A reduction in the minimum wage allowed for tipped employees (e.g., $5.12; effective 7/24/09).