Fundamental Payroll Certification Exam Questions and Answers, Exams of Business Economics

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Fundamental Payroll Cert Chap 4 Exam 62 Questions with

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The crucial distinction in the common law test between an employee and an independent contractor? - CORRECT ANSWER ERs amount of control over EE What IRS form is utilized in order to determine whether a worker is an employee or an independent contractor? - CORRECT ANSWER SS- ERs responsibility in regards to payroll include all the following except? a Paying (wages) b Withholding (taxes) c Reporting (file correct forms) d Assuring that wages paid are commensurable with services provided - CORRECT ANSWER d Assuring that wages paid are commensurable with services provided The following are examples of what a computerized payroll system can help a payroll department accomplish except a Timely, accurate payrolls b Record retention c Reduce human error and labor hours d assure payroll regulations are efficiently followed - CORRECT ANSWER d assure payroll regulations are efficiently followed Generally accepted categories of computerized payroll systems include a SAP b Real time processing and Batch processing c ADP d all of the above - CORRECT ANSWER b Real time processing and Batch processing Examples of accounting areas that most commonly interface with the payroll system include all except a General ledger b Time and Attendance

c Human Resources d profit and loss - CORRECT ANSWER d profit and loss The 2 key advantages of integrated payroll databases is a Real-time access and ability to restrict access b accuracy c multiple users d segregation - CORRECT ANSWER a Real-time access and ability to restrict access All the following are features found in payroll systems providing employee self- service portals except a ability to update data b ability to view W-2s c ability to print wage statements d ability to email information to government entities - CORRECT ANSWER d ability to email information to government entities All of the following are examples of payroll situations benefitting from a special code designation in any computerized payroll system except a Terminated EEs b New Hires c IWOs d Pay rate changes - CORRECT ANSWER c IWOs Benefits to written payroll standard operating procedures (SOPs) do not include a Ensures uniformity of operations b Simplifies training c Provides a reference tool d provide a tool for employee evaluation - CORRECT ANSWER d provide a tool for employee evaluation In greatly simplified terms, what is meant by SOX? a Specialized Office Examples b Standard Operating Examples c Simplified Oversight Exceptions d Refers to the Sarbanes-Oxley Act, a system of checks and balances to divide control and responsibility in accounting. - CORRECT ANSWER d Refers to the

Sarbanes-Oxley Act, a system of checks and balances to divide control and responsibility in accounting. The most important point regarding validating data at an interface junction between accounting systems is - CORRECT ANSWER a Total of data after importing equals subtotal of initial data plus subtotal of data being imported b interfaced systems provide greater versatility c interfaced systems are better than integrated systems d an interface system provides greater security In validating data what are the benefits of utilizing sub-totals? - CORRECT ANSWER Easier to compare a small portion of data rather than the whole picture. Easier to identify specific data causing a variance. Easier to find similarities in a subset of EEs causing a variance. What are three methods to protect payroll against misappropriations? - CORRECT ANSWER Segregate job duties Rotate personnel Restrict access How can an employer protect against "phantom employees"? - CORRECT ANSWER A physical payout once a year conducted by non payroll personnel What additional procedures might a voided payroll check require? - CORRECT ANSWER A W-2C, a claim for refund of taxes paid, a correction to FUTA, a correction to the GL accounts What is the primary focus of external audits? - CORRECT ANSWER Are the financial records appropriate, properly safeguarded and are there any risks that would affect the companies assets. What some common FAQs of external auditors? - CORRECT ANSWER Where are the blank paychecks stored? Who signs? Who approves? Who reconciles? Who records in the GL? What is the primary drawback for the employer in utilizing direct deposit? - CORRECT ANSWER Loss of "float" time on payroll funds

What is the regulatory body of the direct deposit process? - CORRECT ANSWER CFPB (Consumer Financial Protection Bureau) and NACHA ACH Operating Rules What three pieces of information are required to set up direct deposit for an employee? - CORRECT ANSWER EEs bank routing number, EEs bank account number and the. type of account it is How many digits in a routing number? - CORRECT ANSWER 9 What is the body tht vwerifies a routing number? - CORRECT ANSWER ODFI Originating Depository Financial Institution In regards to a direct deposit, what is a "pre notification"? - CORRECT ANSWER An initial entry of a direct deposit transaction with a zero amount. What is the ACH? - CORRECT ANSWER Automated Clearing Process What is the body that begins the ACH file workflow called? - CORRECT ANSWER ODFI (Originating Depository Financial Institution) What is the name of the body that ends the ACH workflow process called? - CORRECT ANSWER RDFI (Receiving Depository Financial Institution) Describe 5 steps of the ACH direct deposit process - CORRECT ANSWER 1. EE provides authorization

2. Employer sends ACH file to ODFI
3. ODFI sends ACH file to RDFI
4. RDFi receives ACH file
5. Sends receipt to EE What reconciliation is required in interfaced payroll systems? - CORRECT ANSWER General.ledgwr payroll liability accounts. 3rd party payments such as union dues HSA accounts or 401K plans How often should payroll liability accounts be reconciled? - CORRECT ANSWER At least monthly

Give three examples of payroll related accounts that should be reconciled monthly. - CORRECT ANSWER Payroll liability accounts. Master record of payments. Payroll bank account What are 3 important points to remember when correcting a direct deposit error?

• CORRECT ANSWER ust be the exact amount of the initial deposit. Must be within 5 banking days. No EE authorization is required. What are the steps to resolving late direct deposit issues? - CORRECT ANSWER 1. Reassure the EE that their money is safe.

2. Verify the routing and account numbers on the written authorization.
3. Have the EE speak with bank reps rather than an ATM
4. Payroll funds should be available at opening of business on payday.
5. Employer contacts their ODFI When are direct deposit funds required to be available to EEs for cash withdrawal? - CORRECT ANSWER The day the funds are settled. Who governs the method of wage payments? - CORRECT ANSWER State laws also govern the time frame. What does "escheat" refer to? - CORRECT ANSWER Unclaimed wages What is a "Business Continuity Plan"? - CORRECT ANSWER What happens in the event of a disaster What are some controls for a small payroll department? - CORRECT ANSWER 1. Store payroll checks in a locked area with the key in the payroll department.
6. Send a list of who is being paid to the department heads
7. have an independent review of the payroll check register before release of payroll.
8. Have accounting do the bank account reconciliation Can an EE sign a contract to be treated as an independent contractor? - CORRECT ANSWER If a worker meets the Common Law Test as an Employee a contract cannot waive that right

What is the Reasonable Basis Test? - CORRECT ANSWER 1. Long standing practice

2. Consistently filed tax returns 3. A past IRS employment tax audit did not disallow 4. IRS has a published ruling 5. Consistently filed tax returns with 1099- Misc IRCA is what? - CORRECT ANSWER Immigration Reform Control Act Exclusion to the requirement of verification of EEs right to work in the US? - CORRECT ANSWER If the EE was continuously employed by the same ER since before November 6, 1986 are not required to complete an I- What is the quickest way to verify an individual's right to work in the US? - CORRECT ANSWER DHS E-Verify System Requirements for I-9 completion? - CORRECT ANSWER First day of hire fill-out I-9, 3 days for ER to complete section 2, retain 3 years from hire date or 1 year from term date. What 3 pieces of information for SSN VS? - CORRECT ANSWER 1. EE last name, first name and middle initial 2. SSN 3. DOB What is the proof that an ER tried to chk/obtain EEs SSN? - CORRECT ANSWER Asking EE to fill out form W- 2 things to know about a ITIN? - CORRECT ANSWER It begins with a "9" and an ITIN cannot be used when filing a W-2 unless.this is the only number you have from the EE. What is the form to get a replacement SSN card? - CORRECT ANSWER SS- In respect to New Hire Reporting,, what is the procedure if an EE quits and is rehired 4 months later? - CORRECT ANSWER If the break in employment is 60 days or more, the rehired EE is reported as a new hire. Examples of non-taxable compensation include: - CORRECT ANSWER Disability, Life Insurance Long term care Insurance, EE discounts, HSAs, Transportation

What are accountable business expenses? - CORRECT ANSWER If you turn in an expense report with receipts it is Non-taxable. What portion of 3rd Party is sick pay is taxable compensation? - CORRECT ANSWER The portion of the premium that the ER pays is considered taxable. compensation What is the meaning of the IRS term "ascension to wealth"? - CORRECT ANSWER hard to say really I haven't experienced it What is "imputed value"? - CORRECT ANSWER the value of a taxable benefit an EE receives from a benefit Are Fringe benefits taxable compensation? - CORRECT ANSWER In general, Fringe benefits (cash and non-cash) are included in an EEs taxable compensation? What is included in an EEs gross income? - CORRECT ANSWER Everything received by the EE in payment for services provided for the ER What is the fair market value of a fringe benefit? - CORRECT ANSWER the amount the EE would have paid a third party to buy or lease the fringe benefit How often should Wars impute income to an EE for taxable fringe benefits received by the EE? - CORRECT ANSWER As frequently as possible. putting income value of fringe benefits adds income, which adds tax, which lowers net pay. It should not be left too long or the impact will be greater. What happens to an EEs taxable compensation when the ER pays the EEs taxes on fringe benefits? - CORRECT ANSWER The EEs taxable compensation increases by the amount of the taxes paid by the ER How is the general ledger affected if the EE will be reimbursing the ER the tax amounts paid by the ER on fringe benefits? - CORRECT ANSWER those amounts are recorded as accounts receivable

Qualified plans are Non-taxable and Non-qualified plans are what? - CORRECT ANSWER Taxable (the presence of the "non" indicates the opposite)

• CORRECT ANSWER