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Basic Payroll MCQ

1. Who typically maintains employee wage rates in the payroll system?

CPA

CFO

Payroll Specialist

CEO

Answer

Correct Answer: Payroll Specialist

Note: This Question is unanswered, help us to find answer for this one

2. Why would a company require a supervisor to approve an employee's hours?

To give the supervisor some work to do

To fulfill an IRS requirement

To exercise an internal control

To fulfill a GAAP requirement

Answer

Correct Answer: To exercise an internal control

Note: This Question is unanswered, help us to find answer for this one

3. What is an NSF check?

A check over $100,000

A check that has already cleared the bank

A postdated check

A non-sufficient funds check, a situation in which there is not enough money in the bank to cover a check

Answer

Correct Answer: A non-sufficient funds check, a situation in which there is not enough money in the bank to cover a check

Note: This Question is unanswered, help us to find answer for this one

4. Which of the following statements about independent contractors is true?

An independent contractor determines when, where, and how he or she will work under a contract.

An independent contractor files a Form W2 like any other employee.

Federal taxes are withheld for independent contractors.

Independent contractors work part-time.

Answer

Correct Answer: An independent contractor determines when, where, and how he or she will work under a contract.

Note: This Question is unanswered, help us to find answer for this one

5. Employee C wants to contribute $8,000 a year to his tax shelter annuity. The district allows payroll deductions for tax shelter annuities to be spread over 18 pay periods. How much will have to be deducted each pay period so that Employee C contributes the $8,000?

$535.43

$644.34

$444.44

$464.66

Answer

Correct Answer: $444.44

Note: This Question is unanswered, help us to find answer for this one

6. The term "earned income credit" refers to ______________.

a special credit for people who make over a certain amount

a credit given to people in the form of a monthly check

a direct reduction in taxes for employees with incomes below a stipulated level

a credit given to people who are unemployed

Answer

Correct Answer: a direct reduction in taxes for employees with incomes below a stipulated level

Note: This Question is unanswered, help us to find answer for this one

7. For an employer, which of the following is a benefit of using direct deposit?

Gets cash out of the company bank account faster

Less costly than printing and signing checks

Prevents employee fraud

No direct benefit

Answer

Correct Answer: Less costly than printing and signing checks

Note: This Question is unanswered, help us to find answer for this one

8. A company that employs ______________ is subject to the Civil Rights Act of 1964.

at least 15 workers for 20 weeks per year

at least 100 workers

at least 1 worker who works 40 hours a week

at least 12 workers for 45 weeks per year

Answer

Correct Answer: at least 15 workers for 20 weeks per year

Note: This Question is unanswered, help us to find answer for this one

9. Why has the IRS allowed employers to combine federal taxes when computing withholding amounts?

The rates are all the same.

Payroll software cannot accommodate different rates.

There is no stated reason.

To make computing taxes easier for employers

Answer

Correct Answer: To make computing taxes easier for employers

Note: This Question is unanswered, help us to find answer for this one

10. Which of the following should happen in the payroll system after an employee is terminated?

The employee should be given a one-time bonus.

The employee's hourly rate should be set to $99.

The employee's former employers should be contacted and notes made.

The employee should be flagged as terminated in the payroll system.

Answer

Correct Answer: The employee should be flagged as terminated in the payroll system.

Note: This Question is unanswered, help us to find answer for this one

11. The term "internal control" refers to ______________.

a safe where petty cash is kept

a measure by which a company safeguards its accounting data

allowing employees access to the company credit card

practice prohibited by the IRS

Answer

Correct Answer: a measure by which a company safeguards its accounting data

Note: This Question is unanswered, help us to find answer for this one

12. What is the purpose of Form 941?

To report annual wages to employees

To report annual wages to the IRS

To reconcile taxes paid with tax liability for unemployment taxes

To reconcile, on a quarterly basis, taxes paid with tax liability for federal taxes

Answer

Correct Answer: To reconcile taxes paid with tax liability for unemployment taxes

Note: This Question is unanswered, help us to find answer for this one

13.
Employee B has an annual salary of $50,000 that is paid to him over 26 pay periods. He works 260 days per year. He retires after working 65 days, during which time he received 6 paychecks.
Given this information, Employee B's gross wages for his final paycheck will be _____________.

$961.52

$1,203.42

$879.32

$343.54

Answer

Correct Answer:

$961.52

Note: This Question is unanswered, help us to find answer for this one

14. What is the purpose of accruing vacation expense?

To record vacation expense in the period earned

To build a savings account for vacations

To allow employers to pay employees for vacation time

To gain better tax write-offs

Answer

Correct Answer: To record vacation expense in the period earned

Note: This Question is unanswered, help us to find answer for this one

15. The term "the accounting process" refers to ______________.

the sequence of steps in accounting from transaction to financial report

the creation of financial reports

the internal controls set by Payroll

the interval between payroll checks

Answer

Correct Answer: the sequence of steps in accounting from transaction to financial report

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16. On which of the following financial statements is Revenue reported?

Balance Sheet

Income Statement

Cash Flow Statement

Payroll Register

Answer

Correct Answer: Income Statement

Note: This Question is unanswered, help us to find answer for this one

17. "Regular earnings" are considered earnings for how many hours of work?

55 per week

40 per week

27.5 per week

80 per week

Answer

Correct Answer: 40 per week

Note: This Question is unanswered, help us to find answer for this one

18. The term "workers compensation insurance" refers to ______________.

insurance paid for by employees to cover them in the event they lose their job due to an off-the-job accident

insurance paid for by the employees to cover them in the event they lose their job due to bad performance

government-issued health insurance

insurance paid for by employers that provides benefits to employees or their families for loss of wages due to job-related accidents, illness, or injuries

Answer

Correct Answer: insurance paid for by employers that provides benefits to employees or their families for loss of wages due to job-related accidents, illness, or injuries

Note: This Question is unanswered, help us to find answer for this one

19. Of the following, which is the best safeguard against employees accessing the payroll system?

Don't allow employees to use the computer

Create password-protected payroll system user accounts

Make employees sign a form saying they won't violate company rules

Allow access to the payroll system only to the CEO

Answer

Correct Answer: Create password-protected payroll system user accounts

Note: This Question is unanswered, help us to find answer for this one

20. The term "audit trail" refers to ______________.

evidence of a sequence of transactions that allows anyone to trace a transaction back through the accounting system

a written ledger of all checks written

the paperwork auditors will request during the annual audit

a report auditors provide post-audit

Answer

Correct Answer: evidence of a sequence of transactions that allows anyone to trace a transaction back through the accounting system

Note: This Question is unanswered, help us to find answer for this one

21. The term "profit sharing" refers to ______________.

termination pay

extra compensation paid for services over and above those normally performed

extra compensation paid to employees based on the profits of the company

regular pay for 40 hours per week

Answer

Correct Answer: extra compensation paid to employees based on the profits of the company

Note: This Question is unanswered, help us to find answer for this one

22. A W4 is ____________.

a tax return form

a form used to claim allowances for the purpose of requesting the withholding of an additional amount or of claiming an exempt status

a form independent contractors must file with the employer

the same as Form 941

Answer

Correct Answer: a form used to claim allowances for the purpose of requesting the withholding of an additional amount or of claiming an exempt status

Note: This Question is unanswered, help us to find answer for this one

23. The term "oppressive child labor" refers to ____________.

the policy of not hiring willing child employees

hiring children from other countries

the employment of any child under the age of sixteen

paying a child for more than 40 hours a week

Answer

Correct Answer: the employment of any child under the age of sixteen

Note: This Question is unanswered, help us to find answer for this one

24. The term "disability insurance" refers to ______________.

insurance paid by employers to cover on-the-job accidents only

insurance paid by employers and employees for protection of the employees against loss of wages due to non-job-related accidents

private insurance employees must take out when starting a new job

municipal-issued insurance

Answer

Correct Answer: insurance paid by employers and employees for protection of the employees against loss of wages due to non-job-related accidents

Note: This Question is unanswered, help us to find answer for this one

25. Which of the following is an example of an internal control for payroll?

Giving employees cash instead of checks

Having the company CFO review all financial reports

Putting employee pay stubs and/or checks in sealed envelopes

Paying employees for the hours they report without review

Answer

Correct Answer: Paying employees for the hours they report without review

Note: This Question is unanswered, help us to find answer for this one

26. The term "commission plan" refers to ______________.

a compensation plan in which the employee earns a percentage of sales.

a compensation plan in which employees are paid based on units produced

termination pay

an agreement to pay an employee a set amount, regardless of hours worked

Answer

Correct Answer: a compensation plan in which the employee earns a percentage of sales.

Note: This Question is unanswered, help us to find answer for this one

27. The term "employee earnings record" refers to ______________.

a payroll record for each employee listing the gross wages, deductions, net pay, and cumulative earnings

a record sent to the IRS at year end detailing an employee's earnings

a weekly report sent to employees with their paychecks

an IRS-issued report mailed to employees' homes

Answer

Correct Answer: a payroll record for each employee listing the gross wages, deductions, net pay, and cumulative earnings

Note: This Question is unanswered, help us to find answer for this one

28. Which of the following illustrates the basic Balance Sheet formula?

Assets + Liabilities = Equity

Assets + Equity = Liabilities

Equity - Liabilities = Assets

Assets = Liabilities + Equity

Answer

Correct Answer: Assets = Liabilities + Equity

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29. Which of the following is a disadvantage of an automated payroll system?

Less accurate tax reporting

More costly than manually preparing payroll

Employees will be laid off since the automated system requires less labor

Employees need a degree in accounting to be able to process payroll

Answer

Correct Answer: More costly than manually preparing payroll

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30. How are FUTA taxes recorded at the time of payroll?

As revenue

As a liability

As an asset

As equity

Answer

Correct Answer: As a liability

Note: This Question is unanswered, help us to find answer for this one

31. The Equal Pay Act ____________________.

outlawed the practice of paying people different amounts based on gender

states that all employees must be paid the same rate for the same position

states that all companies must pay their executives the same amount

states that all underage children must be paid less than the minimum wage

Answer

Correct Answer: outlawed the practice of paying people different amounts based on gender

Note: This Question is unanswered, help us to find answer for this one

32. Are meals provided on the company's premises subject to employment taxes as a benefit?

Yes

Depends on employee job

Depends on state

Answer

Correct Answer: No

Note: This Question is unanswered, help us to find answer for this one

33. Who controls the regulations for the timing of payment of wages?

Federal government

State government

City government

Municipal government

Answer

Correct Answer: State government

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34. Who issues an EIN to a company?

FASB

IRS

Federal government

State government

Answer

Correct Answer: IRS

Note: This Question is unanswered, help us to find answer for this one

35. The term "bona fide occupational qualification" refers to _______________.

the Equal Pay Act

a qualification that allows an employer to hire based on race, religion, or gender

a qualification that forces employers to hire based on race, religion, or gender

a qualification that does not allow an employer to hire based on race, religion, or gender

Answer

Correct Answer: a qualification that allows an employer to hire based on race, religion, or gender

Note: This Question is unanswered, help us to find answer for this one

36. The term "contribution report" refers to ______________.

an annual report sent to employees listing how much they made per month

a quarterly state unemployment tax return that applies an experience rating percentage to gross wages to compute the quarterly tax

an annual report sent to the IRS on behalf of the employee

an internal document given to employees each payroll period

Answer

Correct Answer: a quarterly state unemployment tax return that applies an experience rating percentage to gross wages to compute the quarterly tax

Note: This Question is unanswered, help us to find answer for this one

37. The term "percentage method of withholding" refers to ______________.

the amount of unemployment tax to be withheld

a federal income tax withholding method that applies a formula with both fixed and variable components to the wage amounts

minimum wage rates

a federal income tax withholding method that takes into account gross earnings, payroll period, marital status, and number of withholding allowances

Answer

Correct Answer: a federal income tax withholding method that applies a formula with both fixed and variable components to the wage amounts

Note: This Question is unanswered, help us to find answer for this one

38. What does the acronym SUTA stand for?

Special Unemployment Tax Act

State Unemployment Taxation Analysis

Special Unemployment Taxation Analysis

State Unemployment Tax Act

Answer

Correct Answer: State Unemployment Tax Act

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39. The term "piece rate plan" refers to ______________.

a compensation plan in which the employee earns a percentage of sales

a compensation plan in which employees are paid based on units produced

termination pay

an agreement to pay an employee a set amount, regardless of hours worked

Answer

Correct Answer: a compensation plan in which employees are paid based on units produced

Note: This Question is unanswered, help us to find answer for this one

40. Which of the following payroll items is worth auditing?

The middle names of employees

The addresses of employees

That gross pay for each individual matches his or her employment agreement

The prior employers of employees

Answer

Correct Answer: That gross pay for each individual matches his or her employment agreement

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41. How often should payroll be reconciled?

Hourly

Once per payroll period

Weekly

Annually

Answer

Correct Answer: Once per payroll period

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42. What is the purpose of an EIN?

Same as a stock ticker symbol

Used to report employee earnings

Distinguishes public companies from private companies

An identifier for the IRS to track employer

Answer

Correct Answer: An identifier for the IRS to track employer

Note: This Question is unanswered, help us to find answer for this one

43. According to the Self-Employment Contributions Act, any enterprise ___________________ is considered a business.

that hires at least 10 people

that pays federal taxes

that makes over $100,000 per year

in which activities are carried out for the purpose of earning a living

Answer

Correct Answer: in which activities are carried out for the purpose of earning a living

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44. Which of the following is a benefit of an automated payroll system?

More economical than processing payroll within the company

Ability to fire some of the payroll staff since the function now requires less labor

Fewer internal controls are needed

Allows a company to process payroll more quickly

Answer

Correct Answer: Allows a company to process payroll more quickly

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45. What is the purpose of Form W2?

To report annual wages to employees

To report annual wages to the IRS

To report to employees their total wages earned and taxes paid

To reconcile, on a quarterly basis, taxes paid with tax liability for federal taxes

Answer

Correct Answer: To report to employees their total wages earned and taxes paid

Note: This Question is unanswered, help us to find answer for this one

46. The term "self-employment income" refers to ______________.

income earned working for another

income earned by an individual from a business operated as a sole proprietorship

income earned while working out of the country

income earned above $100,000

Answer

Correct Answer: income earned by an individual from a business operated as a sole proprietorship

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47. The term "unemployment compensation benefits" refers to ______________.

payments under state programs made for a limited time to unemployed workers

payments under a federal program to unemployed workers

insurance an employee must take out privately

payments to employees who have suffered accidents on the job

Answer

Correct Answer: payments under state programs made for a limited time to unemployed workers

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48. The term "bonus" refers to ______________.

termination pay

a sum of money given to an employee in addition to the employee's regular compensation 0.10

severance pay

regular pay for 40 hours per week

Answer

Correct Answer: a sum of money given to an employee in addition to the employee's regular compensation 0.10

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49. The term "payroll register" refers to ______________.

a weekly report sent to employees detailing the hours they worked

a financial statement

a time card

a payroll record for a payroll period listing all employees, gross wages, deductions, and net pay

Answer

Correct Answer: a payroll record for a payroll period listing all employees, gross wages, deductions, and net pay

Note: This Question is unanswered, help us to find answer for this one

50. The Circular E: Employer's Tax Guide is ______________.

an IRS publication that describes withholding methods

an SEC report for public companies

another name for an employee handbook

a taxation form for unemployment

Answer

Correct Answer: an IRS publication that describes withholding methods

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51. The term "taxable wages" refers to ______________.

all wages earned regardless of amount

the maximum calendar year gross wages that are subject to a particular tax

commission-based wages only

regular wages only

Answer

Correct Answer: the maximum calendar year gross wages that are subject to a particular tax

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52. Which of the following factors might prompt a company to switch to an automated payroll system?

Income tax rates

Number of employees being paid

Annual raises are coming up

Payroll staff has increased

Answer

Correct Answer: Number of employees being paid

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53. The term "overtime" refers to ______________.

hours worked each week beyond 27.5

hours worked each week beyond 55

hours worked each week beyond 80

hours worked each week beyond 40

Answer

Correct Answer: hours worked each week beyond 40

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54. Which of the following accounts is debited when FUTA taxes are paid to the government?

FUTA Expense

FUTA Payable

Wages Payable

Wages Expense

Answer

Correct Answer: FUTA Payable

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55. Which of the following age groups is covered by the Age Discrimination in Employment Act of 1967?

Up to age 20

Ages 20 to 25

Over 40

Over 80

Answer

Correct Answer: Over 40

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56.
At ABC School, the current salary schedule for custodians is as follows:

Step 1: $12.47
Step 2: $13.09
Step 3: $13.75
Step 4: $14.44
Step 5: $15.16

Employees are moved to the next step on the salary schedule annually. Wages for the year have increased 2.25% from the previous school year. Employee C was paid on Step 2 for the previous school year.

Given the above schedule, what is Employee C's pay rate for the current school year?

$15.04

$16.07

$12.02

$14.06

Answer

Correct Answer:

$14.06

Note: This Question is unanswered, help us to find answer for this one

57. The term "direct deposit" refers to ______________.

writing a check for payroll

entering an employee's time into the payroll system

placing funds directly in an employee's bank account without issuing a paycheck

depositing accounts receivable checks into the bank

Answer

Correct Answer: entering an employee's time into the payroll system

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58. What is the purpose of auditing payroll ?

To fulfill an IRS requirement

To fulfill a GAAP requirement

To identify employees who deserve a raise

To verify that payroll records are accurate and to reflect what happened

Answer

Correct Answer: To verify that payroll records are accurate and to reflect what happened

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59. Payroll system software can be hosted _____________.

online

on a remote computer

on a local computer

All of the above

Answer

Correct Answer: All of the above

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60. The term "wage bracket method for withholding taxes" refers to ______________.

a program used to process payroll

a company's policy on wage rates

minimum wage rates

a federal income tax withholding method that takes into account gross earnings, payroll period, marital status, and number of withholding allowances

Answer

Correct Answer: a federal income tax withholding method that takes into account gross earnings, payroll period, marital status, and number of withholding allowances

Note: This Question is unanswered, help us to find answer for this one

61. For an employer, which of the following is a disadvantage of using direct deposit?

Builds goodwill with employees

Immediately reduces available cash because everyone is paid on payday without having to wait for checks to clear

Increases employee opportunity for fraud

Saves the company time and money

Answer

Correct Answer: Immediately reduces available cash because everyone is paid on payday without having to wait for checks to clear

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62. For an employee, which of the following is a benefit of using direct deposit?

Eliminates the need for the employee to reconcile bank accounts

Allows employee to commit fraud more easily

No direct benefit to employee

Eliminates the need for the employee to go to the bank to deposit a check, since pay is deposited directly in the bank, often the day before payday

Answer

Correct Answer: Eliminates the need for the employee to go to the bank to deposit a check, since pay is deposited directly in the bank, often the day before payday

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63. The term "withholding allowance" refers to ______________.

the extra amount held for the employee in a savings account

the additional tax obligation of the employee

the additional tax obligation of the employer

an allowance that reduces taxable income by a fixed amount

Answer

Correct Answer: an allowance that reduces taxable income by a fixed amount

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64. What is the purpose of Form 940?

To report annual wages to employees

To report annual wages to the IRS

To reconcile taxes paid with tax liability for unemployment taxes

To reconcile taxes paid with tax liability for federal taxes

Answer

Correct Answer: To reconcile taxes paid with tax liability for unemployment taxes

Note: This Question is unanswered, help us to find answer for this one

65. What is the purpose of a time card?

To track employee hours worked per payroll period

To calculate employee tax withholding

To calculate bonuses

To determine employee tax exemptions

Answer

Correct Answer: To track employee hours worked per payroll period

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66. What is an EIN?

Employee Identification Name

Employer Identification Number

Every Independent Numerator

Employer Identification Name

Answer

Correct Answer: Employer Identification Number

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67. On which of the following financial statements is Payroll Expense reported?

Statement of Retained Earnings

Income Statement

Balance Sheet

Cash Flow Statement

Answer

Correct Answer: Income Statement

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68. The term "payroll period" refers to ____________.

a calendar year

one month

the frequency of employee compensation

two weeks

Answer

Correct Answer: the frequency of employee compensation

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69. The term "statutory employee" refers to ______________.

another name for an independent contractor

a regular, full-time employee subject to tax withholdings

a part-time employee

the president of a company

Answer

Correct Answer: a regular, full-time employee subject to tax withholdings

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70. A company must file Form W3 every year by _____________.

January 31

September 30

February 28

December 31

Answer

Correct Answer: December 31

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71. The term "cumulative method of withholding" refers to ______________.

the calculation of minimum wage rates

a federal income tax withholding method that applies a formula with both fixed and variable components to the wage amounts

a federal income tax withholding method that takes into account gross earnings, payroll period, marital status, and number of withholding allowances

A federal income tax withholding method in which the current withholding amount is determined by cumulative wages and the amount that has already been withheld

Answer

Correct Answer: A federal income tax withholding method in which the current withholding amount is determined by cumulative wages and the amount that has already been withheld

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72. The term "incentive payment plan" refers to _______________.

regular wage payments

a compensation plan based on company performance

another name for termination pay

a compensation plan in which employees earn more when they reach certain goals

Answer

Correct Answer: a compensation plan in which employees earn more when they reach certain goals

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73. Which of the following is a major payroll processor?

ADP

IRS

FASB

SEC

Answer

Correct Answer: ADP

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74. The Fair Labor Standards Act of 1938 __________________.

established equal employment laws for women and children

abolished slave labor

Set standard wages for hours worked

Set the minimum wage at $8 per hour

Answer

Correct Answer: Set standard wages for hours worked

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75. What is Form W3?

A detailed version of Form W2

An annual tax filing form for private corporations

A form filed with the Social Security Administration summarizing all employee W2s

The same as Form 941

Answer

Correct Answer: A form filed with the Social Security Administration summarizing all employee W2s

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76. Which of the following journal entries would be made to void a payroll check printed in error?

Dr: Salary Payable, Cr: Salary Expense

Dr: Salary Expense, Cr: Cash

Dr: Cash, Cr: Salary Payable

Dr: Cash, Cr: Salary Expense

Answer

Correct Answer: Dr: Cash, Cr: Salary Expense

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77. The term "escheat law" refers to ____________.

a law that states employees must be paid twice per month

a law that requires employers to hold un-cashed payroll checks for a certain amount of time

A law that states employees cannot be over the age of 65

A law that states employees can be given raises only once per year

Answer

Correct Answer: a law that requires employers to hold un-cashed payroll checks for a certain amount of time

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78. The term "guaranteed wage" refers to ______________.

regular per-hour wages

overtime pay beyond 60 hours per week

a payroll deduction

an agreement to pay an employee a set amount, regardless of hours worked

A law that states employees can be given raises only once per year

Answer

Correct Answer: an agreement to pay an employee a set amount, regardless of hours worked

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79. A company must send W2 forms every year to its employees by _____________.

January 31

February 28

June 30

September 30

Answer

Correct Answer: January 31

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80. If an employer

$100

$10

Not enough information

Answer

Correct Answer: $0

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81. What is the current 2012 FICA SS rate for employees?

4.2%

7.65%

1.45%

6.2%

Not enough information

Answer

Correct Answer: 4.2%

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82. Where do you look to find payroll withholding deductions based on employee elected filing status?

Dept of Revenue Services

Circular E for that year

Your state's Dept of Labor Tax Rate Schedule

IRS Tax Table

Answer

Correct Answer: Circular E for that year

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83. Where is a student's EIN generally registered?

EIS

ACC

SEC

PAWS

Answer

Correct Answer: PAWS

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84. If an employee's gross wages are $10,000, federal withholding is $1,000 and the employee wages YTD is $112,000, how much more tax money should be taken from employee's check?

$520.00

$145.00

$765.00

$0.00

$565.00

Answer

Correct Answer: $145.00

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85. A non-exempt employee works 38 hours one week and 46 hours the next week. How many hours should this employee be paid for two weeks if guaranteed 40 hours?

The employee should be paid 78 regular hours and 6 overtime hours.

The employee should be paid 80 regular hours.

The employee should be paid 86 hours. 78 reg hours, 2 guarantee hours and 6 OT hours.

The employee should be paid 78 regular hours. No overtime

none of the answers are correct

Answer

Correct Answer: The employee should be paid 86 hours. 78 reg hours, 2 guarantee hours and 6 OT hours.

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86. A non-exempt employee worked 48 hours one week which included a holiday and 46 hours the next week. How much OT pay is due to this employee?

Only 6 hours OT

None of the answers are correct

None. The employee is non-exempt

8 hours of OT

14 hours of OT

Answer

Correct Answer: Only 6 hours OT

Note: This Question is unanswered, help us to find answer for this one

87. How long should a W-4 be kept on file?

Five years.

Two years.

Twelve years.

Ten years.

Answer

Correct Answer: Two years.

Note: This Question is unanswered, help us to find answer for this one

88. How long should an employer retain payroll information?

Three years.

Fifty years.

Ten years.

Five years.

Answer

Correct Answer: Three years.

Note: This Question is unanswered, help us to find answer for this one

89. What is the current employer tax rate for FICA social security and medicare?

4.2

5.2%

7.65%

1.45

Answer

Correct Answer: 7.65%

Note: This Question is unanswered, help us to find answer for this one

90. Which form is needed for independent contractors or vendors who are seeking payment for their products/services?

W-2

W-9

W-4

1099

I-9

Answer

Correct Answer: W-9

Note: This Question is unanswered, help us to find answer for this one

91. Which form is used to correct an employees reported wages to IRS after W-2's have been issued?

W-2 Misc

Resend W-2 with correct information

W-4C

W-2 Revised

W-2C

Answer

Correct Answer: W-2C

Note: This Question is unanswered, help us to find answer for this one

92. Which tax return is used to file federal annual employer paid taxes?

915 Tax Return

941 Tax Return

945 Tax Return

943 Tax Return

940 Tax Return

Answer

Correct Answer: 940 Tax Return

Note: This Question is unanswered, help us to find answer for this one

93. What form must a contractor include to not be considered an employee?

Invoice

Agreement.

Check.

NDA

Answer

Correct Answer: Invoice

Note: This Question is unanswered, help us to find answer for this one

94. Which tax can you elect to be paid for in advance in your check if you qualify?

Fica

SS Tax

Medicare

FIT

EIC

Answer

Correct Answer: EIC

Note: This Question is unanswered, help us to find answer for this one

95. What two accounting records are payroll typically recorded to?

Front and back.

Income Statement and Balance Sheet

They are not recorded.

General ledger and income statement.

Answer

Correct Answer: Income Statement and Balance Sheet

Note: This Question is unanswered, help us to find answer for this one

96. What type of tax return is used to file employee deducted and employer matched payroll taxes at the end of a quarter?

945 Tax Return

941 Tax Return

UCT-6

940 Tax Return

Answer

Correct Answer: 941 Tax Return

Note: This Question is unanswered, help us to find answer for this one

97. When accounting for taxes payable, how are they listed?

Journal.

Ledger.

Debit.

Credit.

Answer

Correct Answer: Credit.

Note: This Question is unanswered, help us to find answer for this one

98. An exempt employee is exempt from...?

Medicare Taxes

All Federal and State taxes

Social Security Taxes

None of the above answers are correct

Overtime

Answer

Correct Answer: Overtime

Note: This Question is unanswered, help us to find answer for this one

99. If you were recording journal entries for wage expenses, where would they be listed?

Debit.

Ledger.

Credit.

Journal.

Answer

Correct Answer: Debit.

Note: This Question is unanswered, help us to find answer for this one

100. If exempt employee Dr. Banks worked 48 hours in one week and 46 hours in a second week, how much overtime should he be paid?

14 hours OT

None

28 hours OT

8 hours OT

6 hours OT

Answer

Correct Answer: None

Note: This Question is unanswered, help us to find answer for this one

101. What is a tax outside the scope of Federal taxes that an employer and employee are legally obligated to?

State Income Tax

Medicare tax.

Federal income tax.

Inheritance tax.

Answer

Correct Answer: State Income Tax

Note: This Question is unanswered, help us to find answer for this one

102. What form is required to verify employment eligibility for a new or potential employee?

W-2

W-9

1099

W-4

I-9

Answer

Correct Answer: I-9

Note: This Question is unanswered, help us to find answer for this one

103. Who is a “nominee”?

Delegated parties who are given limited authority to act on behalf of an entity for duties including payroll.

The Guarantor.

An employee who makes significant political contributions.

Delegated parties given complete authoriy to act on behalf of an entity for duties including payroll.

Answer

Correct Answer: Delegated parties who are given limited authority to act on behalf of an entity for duties including payroll.

Note: This Question is unanswered, help us to find answer for this one

104. What is the maximum taxable earnings allowed for medicare?

$106,800

$102,400

The is no maximum taxable earnings for medicare?

$145,000

$110,100

Answer

Correct Answer: The is no maximum taxable earnings for medicare?

Note: This Question is unanswered, help us to find answer for this one

105. Which form is filled out by the employee and includes an employees withholding for federal tax purposes?

1099

1040

W-2

W-4

Answer

Correct Answer: W-4

Note: This Question is unanswered, help us to find answer for this one

106. What three payroll taxes are employers responsible for?

FICA, MUTA, SUNA

FICA, FUTA, PUMA

FICA, FUTA, SUPA

FICA, FUTA, SUTA

Answer

Correct Answer: FICA, FUTA, SUTA

Note: This Question is unanswered, help us to find answer for this one

107. Are you obligated to set up a method of taxation for independent contractors?

The government will set up their taxes for them.

Yes.

No.

You must mutually agree on taxation.

Answer

Correct Answer: No.

Note: This Question is unanswered, help us to find answer for this one

108. What type of form is used to determine the amount of withholding taxes deducted from an employees check?

1099

W-2

I-9

W-4

Answer

Correct Answer: W-4

Note: This Question is unanswered, help us to find answer for this one

109. What is the standard rate for Medicare taxes?

1.23%

1.45%

10%

Answer

Correct Answer: 1.45%

Note: This Question is unanswered, help us to find answer for this one

110. Which form do you use to declare exemptions and allowances?

W-6

W-4

W-2

WD-40

Answer

Correct Answer: W-4

Note: This Question is unanswered, help us to find answer for this one

111. What is an ACH payment related to?

Local taxation

Direct deposits

Financial privacy

All of these

Answer

Correct Answer: Direct deposits

Note: This Question is unanswered, help us to find answer for this one

112. What is the current medicare taxable rate for 2012?

1.45%

4.2%

7.65%

5.2%

5.65%

Answer

Correct Answer: 1.45%

Note: This Question is unanswered, help us to find answer for this one

113. What requirements does the FLSA have for records keeping?

None beside accurate record keeping.

Higher taxes for lower performance.

Lower taxes for higher performance.

Payment for tenured employees.

Answer

Correct Answer: None beside accurate record keeping.

Note: This Question is unanswered, help us to find answer for this one

114. Which employee tax elected filing status will deduct the highest withholding amount?

Single 5

Single 0

Widowed 0

Divorced 2

Married 1

Answer

Correct Answer: Single 0

Note: This Question is unanswered, help us to find answer for this one

115. What tax document is provided at the end of the year to independent contractors and includes all payments paid?

W-4

I-9

1099 Misc Form

W-2

W-9

Answer

Correct Answer: 1099 Misc Form

Note: This Question is unanswered, help us to find answer for this one

116. What forms are filed at the end of the year to report employee wages to IRS?

W-2

1099

I-9

W-4

1040

Answer

Correct Answer: W-2

Note: This Question is unanswered, help us to find answer for this one

117. In the General Journal, which side would your payroll tax expense be located?

Journal

Debit

Credit

Ledger

Answer

Correct Answer: Debit

Note: This Question is unanswered, help us to find answer for this one

118. How many yearly paychecks should a bi-weekly pay period yield to an employee?

Answer

Correct Answer: 26

Note: This Question is unanswered, help us to find answer for this one

119. Which is listed under payroll taxes and costs?

Medicare.

Income

Debt

Rent

Answer

Correct Answer: Medicare.

Note: This Question is unanswered, help us to find answer for this one

120. What specific criteria must be used when making a voluntary deduction for meals?

It must be during work hours.

It must be at work.

It must be after work hours.

The meal must have been job-related.

Answer

Correct Answer: The meal must have been job-related.

Note: This Question is unanswered, help us to find answer for this one

121. The combination of the Social Security tax and the Medicare tax is referred to by what acronym?

SSMT

FICA

Answer

Correct Answer: FICA

Note: This Question is unanswered, help us to find answer for this one

122. 401K deductions are calculated from an employee's ...

None of the answers are correct

After taxes but before any other deductions are taken

Gross Wages before taxes

Net wages after taxes

Answer

Correct Answer: Gross Wages before taxes

Note: This Question is unanswered, help us to find answer for this one

123. Which of the following do employees use to report annual income tax returns?

I-95

I-9

W-4

W-2

Answer

Correct Answer: W-2

Note: This Question is unanswered, help us to find answer for this one

124. True or false? A fiscal year must start on January 1st.

False

True

Answer

Correct Answer: False

Note: This Question is unanswered, help us to find answer for this one

125. What is a reason an employee might see a garnishment on their paycheck?

Logical payment of bills.

Child support.

Good performance.

Sound financial planning.

Answer

Correct Answer: Child support.

Note: This Question is unanswered, help us to find answer for this one

126. What does IRA stand for?

Independent Revenue Account

Individual Retirement Account

None of these

Interest Returns Account

Answer

Correct Answer: Individual Retirement Account

Note: This Question is unanswered, help us to find answer for this one

127. What does the initials EIC stands for?

Earned Income Credit

Earned Interest Credit

Earned Income Check

Earnings Income Tax Credit

None of these answers are correct

Answer

Correct Answer: Earned Income Credit

Note: This Question is unanswered, help us to find answer for this one

128. Which tax is unique to the states, California, Hawaii, New Jersey, New York, and Rhode Island?

No taxes.

Disability insurance tax.

Extraordinarily low taxes.

Tea tax.

Answer

Correct Answer: Disability insurance tax.

Note: This Question is unanswered, help us to find answer for this one

129. What must all EIN applications disclose?

The true, legal owner of the business.

The agreements that a business is in.

The products that the business sells.

The amount of money the business makes.

Answer

Correct Answer: The true, legal owner of the business.

Note: This Question is unanswered, help us to find answer for this one

130. An employee works 40 hours at $15 per hour. How much would their weekly pre-tax pay be?

$600

$480

$500

$700

Answer

Correct Answer: $600

Note: This Question is unanswered, help us to find answer for this one

131. What is an example of a voluntary deduction?

Income tax.

401(k)

Sales tax.

Luxury tax.

Answer

Correct Answer: 401(k)

Note: This Question is unanswered, help us to find answer for this one

132. Which of the following is a payroll-related tax that is imposed on employers?

FICA taxes.

FISA taxes.

FINRA taxes.

NAFTA taxes.

Answer

Correct Answer: FICA taxes.

Note: This Question is unanswered, help us to find answer for this one

133. What is the typical pay period?

Annually.

Bi-weekly.

Semi-annually.

Bi-monthly.

Answer

Correct Answer: Bi-weekly.

Note: This Question is unanswered, help us to find answer for this one

134. If you were to purchase stock, how is it referred to in terms of payroll deductions?

Investment plan.

Employee stock purchase plan.

It is completely ignored.

Investing strategy.

Answer

Correct Answer: Employee stock purchase plan.

Note: This Question is unanswered, help us to find answer for this one

135. Which tax form does an employee use?

W-5

W-1

W-8

W-2

Answer

Correct Answer: W-2

Note: This Question is unanswered, help us to find answer for this one

136. Which tax form does a contractor use?

1099

1077

2055

4531

Answer

Correct Answer: 1099

Note: This Question is unanswered, help us to find answer for this one

137. What is the employers responsibility with regard to Medicare taxes?

Employers are only half responsible.

Employers are responsible for paying both the employer and employee's portion of the Medicare tax.

Nobody is responsible.

Employers are not responsible.

Answer

Correct Answer: Employers are responsible for paying both the employer and employee's portion of the Medicare tax.

Note: This Question is unanswered, help us to find answer for this one

138. What is an Employer Identification Number for?

It is the healthcare code.

It identifies transactions in a business.

It identifies a businesses entity.

It does nothing.

Answer

Correct Answer: It identifies a businesses entity.

Note: This Question is unanswered, help us to find answer for this one

139. What is a pay period?

The time when employees pay their taxes.

The period in time when businesses have to pay their taxes.

The one time per year that employees are paid.

A recurring period of time that time is recorded and paid.

Answer

Correct Answer: A recurring period of time that time is recorded and paid.

Note: This Question is unanswered, help us to find answer for this one

140. Which is an example of a required deduction?

Preferred taxes.

Private taxes.

There are no required deductions.

State taxes

Answer

Correct Answer: State taxes

Note: This Question is unanswered, help us to find answer for this one

141. An employee has a HR status of 2080 annual hours, what is their employment status?

Commission

Seasonal

Full Time

None of the answers are correct

Part Time

Answer

Correct Answer: Full Time

Note: This Question is unanswered, help us to find answer for this one

142. When can voluntary deductions be made?

Never.

When the government requests it.

Only when the employee has agreed to them.

Any time.

Answer

Correct Answer: Only when the employee has agreed to them.

Note: This Question is unanswered, help us to find answer for this one

143. What is a contractor?

A person who uses a W-2 for tax reasons.

Someone trained in-house.

A person receiving payment for a task in its entirety.

Someone receiving cash payments.

Answer

Correct Answer: A person receiving payment for a task in its entirety.

Note: This Question is unanswered, help us to find answer for this one

144. What is an employee?

A person who gives an invoice to their client.

A person who is trained and hired.

A person using a 1099 for for tax reasons.

A person who is not employed.

Answer

Correct Answer: A person who is trained and hired.

Note: This Question is unanswered, help us to find answer for this one

145. Who is responsible for paying taxes deducted from employee's check?

The state of which the employee lives in is responsible for taxes deducted from an employee's check.

The IRS is responsible for the taxes deducted from an employee's check.

The employee is responsible for taxes deducted from their check.

The employer is responsible for paying taxes deducted from an employee's check to the appropriate agency.

Answer

Correct Answer: The employer is responsible for paying taxes deducted from an employee's check to the appropriate agency.

Note: This Question is unanswered, help us to find answer for this one

146. What is the function of payroll?

Accounting.

Records keeping.

The recording of salaries, wages, bonuses, and deductions.

To hand out paychecks.

Answer

Correct Answer: The recording of salaries, wages, bonuses, and deductions.

Note: This Question is unanswered, help us to find answer for this one

147. What is gross pay?

The total amount earned, after taxes

Neither of these

The total amount earned, before taxes

Answer

Correct Answer: The total amount earned, before taxes

Note: This Question is unanswered, help us to find answer for this one

148. A bonus is listed under what category?

Benefits.

Shrinkage.

Rent.

Depreciation.

Answer

Correct Answer: Benefits.

Note: This Question is unanswered, help us to find answer for this one

149. The amount of pay that an employee "takes home" or can deposit into the bank is called?

Margin

Net

Gross

Answer

Correct Answer: Net

Note: This Question is unanswered, help us to find answer for this one

150. Which is not entitled to company benefits?

Contractor

Employees with poor performance.

Managers.

Employees.

Answer

Correct Answer: Contractor

Note: This Question is unanswered, help us to find answer for this one

151. Which of the following is considered a withholding tax?

Payment tax.

Income tax.

Sales tax.

Inheritance tax.

Answer

Correct Answer: Income tax.

Note: This Question is unanswered, help us to find answer for this one

152. What type of form is used to pay funds directly to employees bank account?

Payroll Distribution Form

Funds Transfer Form

ACH Direct Transfer Form

Direct Deposit Form

Answer

Correct Answer: Direct Deposit Form

Note: This Question is unanswered, help us to find answer for this one

Payroll MCQs | Topic-wise

MCQ on Basic Payroll

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Basic Payroll MCQ

1. Who typically maintains employee wage rates in the payroll system?

2. Why would a company require a supervisor to approve an employee's hours?

3. What is an NSF check?

4. Which of the following statements about independent contractors is true?

5. Employee C wants to contribute $8,000 a year to his tax shelter annuity. The district allows payroll deductions for tax shelter annuities to be spread over 18 pay periods. How much will have to be deducted each pay period so that Employee C contributes the $8,000?

6. The term "earned income credit" refers to ______________.

7. For an employer, which of the following is a benefit of using direct deposit?

8. A company that employs ______________ is subject to the Civil Rights Act of 1964.

9. Why has the IRS allowed employers to combine federal taxes when computing withholding amounts?

10. Which of the following should happen in the payroll system after an employee is terminated?

11. The term "internal control" refers to ______________.

12. What is the purpose of Form 941?

13. Employee B has an annual salary of $50,000 that is paid to him over 26 pay periods. He works 260 days per year. He retires after working 65 days, during which time he received 6 paychecks.Given this information, Employee B's gross wages for his final paycheck will be _____________.

14. What is the purpose of accruing vacation expense?

15. The term "the accounting process" refers to ______________.

16. On which of the following financial statements is Revenue reported?

17. "Regular earnings" are considered earnings for how many hours of work?

18. The term "workers compensation insurance" refers to ______________.

19. Of the following, which is the best safeguard against employees accessing the payroll system?

20. The term "audit trail" refers to ______________.

21. The term "profit sharing" refers to ______________.

22. A W4 is ____________.

23. The term "oppressive child labor" refers to ____________.

24. The term "disability insurance" refers to ______________.

25. Which of the following is an example of an internal control for payroll?

26. The term "commission plan" refers to ______________.

27. The term "employee earnings record" refers to ______________.

28. Which of the following illustrates the basic Balance Sheet formula?

29. Which of the following is a disadvantage of an automated payroll system?

30. How are FUTA taxes recorded at the time of payroll?

31. The Equal Pay Act ____________________.

32. Are meals provided on the company's premises subject to employment taxes as a benefit?

33. Who controls the regulations for the timing of payment of wages?

34. Who issues an EIN to a company?

35. The term "bona fide occupational qualification" refers to _______________.

36. The term "contribution report" refers to ______________.

37. The term "percentage method of withholding" refers to ______________.

38. What does the acronym SUTA stand for?

39. The term "piece rate plan" refers to ______________.

40. Which of the following payroll items is worth auditing?

41. How often should payroll be reconciled?

42. What is the purpose of an EIN?

43. According to the Self-Employment Contributions Act, any enterprise ___________________ is considered a business.

44. Which of the following is a benefit of an automated payroll system?

45. What is the purpose of Form W2?

46. The term "self-employment income" refers to ______________.

47. The term "unemployment compensation benefits" refers to ______________.

48. The term "bonus" refers to ______________.

49. The term "payroll register" refers to ______________.

50. The Circular E: Employer's Tax Guide is ______________.

51. The term "taxable wages" refers to ______________.

52. Which of the following factors might prompt a company to switch to an automated payroll system?

53. The term "overtime" refers to ______________.

54. Which of the following accounts is debited when FUTA taxes are paid to the government?

55. Which of the following age groups is covered by the Age Discrimination in Employment Act of 1967?

57. The term "direct deposit" refers to ______________.

58. What is the purpose of auditing payroll ?

59. Payroll system software can be hosted _____________.

60. The term "wage bracket method for withholding taxes" refers to ______________.

61. For an employer, which of the following is a disadvantage of using direct deposit?

62. For an employee, which of the following is a benefit of using direct deposit?

63. The term "withholding allowance" refers to ______________.

64. What is the purpose of Form 940?

65. What is the purpose of a time card?

66. What is an EIN?

67. On which of the following financial statements is Payroll Expense reported?

68. The term "payroll period" refers to ____________.

69. The term "statutory employee" refers to ______________.

70. A company must file Form W3 every year by _____________.

71. The term "cumulative method of withholding" refers to ______________.

72. The term "incentive payment plan" refers to _______________.

73. Which of the following is a major payroll processor?

74. The Fair Labor Standards Act of 1938 __________________.

75. What is Form W3?

76. Which of the following journal entries would be made to void a payroll check printed in error?

77. The term "escheat law" refers to ____________.

78. The term "guaranteed wage" refers to ______________.

79. A company must send W2 forms every year to its employees by _____________.

80. If an employer

13.
Employee B has an annual salary of $50,000 that is paid to him over 26 pay periods. He works 260 days per year. He retires after working 65 days, during which time he received 6 paychecks.
Given this information, Employee B's gross wages for his final paycheck will be _____________.