Payroll Accounting
No child under which age may not work in any job classified as hazardous?
17
Based on the Personal Allowances Worksheet, how many federal allowances would be claimed by a single employee with one job and no dependents, who files as single on his tax return, and who claims no credits on his tax returns? 0 1 2 3
2
Employers must complete and sign Section 2 of the Form I9 within how many days of employment?
3 business days
How long should an employer retain records of employment taxes? 2 years 3 years 4 years 5 years
4 years
Which age group may work an unlimited number of hours? - Under 14 years of age - Ages 14 and 15 - Ages 16 and 17
Ages 16 and 17
A pay period can be which of the following? Answer: A. Monthly B. Weekly C. Biweekly D. Semimonthly E. All of these options
All of these options
Which of the following circumstances allows for a disparity in pay between different genders? Answer: A. A seniority system B. A merit system C. A merit system based on quantity or quality of output D. All of these options
All of these options
Which of the following is an acceptable document for employment eligibility verification purposes? U.S. Passport Permanent Resident Card U.S. Coast Guard merchant mariner card All of these options
All of these options
When completing Form W-4, the total from the Personal Allowances Worksheet is used in what manner? A. It is used as a check figure against the result of Form W-4. B. It is transferred to a line within Form W-4. C. It is used to calculate a figure that is transferred to a line within Form W-4. D. It is not used to complete Form W-4.
B. It is transferred to a line within Form W-4.
An administrative (office) employee earns an annual salary which, when divided by total hours worked during the year, is the equivalent of $6.68/hour. Is this compliant or non-compliant with the Fair Labor Standards Act?
Compliant
Tipped employees
Covered by FLSA; these employees receive a specified amount in tips per month
The workweek must be ___ from one week to another. It may only be altered if the change is intended to be permanent and is not made in order to circumvent overtime requirements.
consistent
Within the employee earnings record, most columns on the left side relate to employee earnings, while most columns on the right side relate to _____. Answer: A. allowances B. deductions C. regular hours worked D. overtime hours worked
deductions
Who is exempt from overtime wages?
executive, administrative, and professional workers.
Incentive plan
more pay for increased productivity
How are the premiums for workers' compensation insurance based?
on the relative risk associated with different job types
Premium rate
the additional overtime hourly rate; represents the premium over the regular hourly rate to which the piecework employee is entitled for overtime hours worked
What act occurred in 1986?
Immigration Reform and Control Act
PRWORA
Improves enforcement of child support
A terminated employee is or is not entitled to all compensation earned. These earnings are subject to federal tax withholding.
Is entitled
If an employer pays a portion of the employee's earnings after death, no federal income tax will be withheld. Answer: A. True B. False
True
T/F: Employees may be required to contribute to state disability insurance, depending on the state's regulations.
True
T/F: Nine states (AK,FL, NV, NH, SD, TN, TX, WA, WY) do not collect state income tax.
True
T/F: State income tax withholding is based on state taxable income, which may be the same as federal.
True
T/F:An individual's filing status is used to determine the income threshold over which additional Medicare tax is levied.
True
T/F:Assuming that an employee's earnings do not exceed the Social Security Wage Base, the amount of taxable earnings used to calculate Medicare tax is the same amount that is used to calculate Social Security tax.
True
The IRS publishes many different withholding tables in Circular E. Answer: A. True B. False
True
The payroll register can be used to complete the employee earnings records. Answer: A. True B. False
True
For employees belonging to a formalized employee's association
Union dues
Wage-bracket method
Uses marital status, withholding allowances from W-4 form, and taxable pay
Union dues, retirement plans, medical plans, cafeteria plans, and flexible spending accounts are all examples of ____ deductions.
Voluntary
Funds that reimburse employees for qualified benefits, such as dependent care
flexible spending account
Graduated tax
increases as the employee's earnings increase.
After death, a portion of employee's earnings __may be/may not be___ paid. These are not subject to federal tax withholding
may be paid
The FLSA _____ overtime to be paid to an employee who works night or weekend shifts (assuming that the 40 hours per week threshold has NOT been met). Answer: A. always requires B. sometimes requires C. never requires D. might require
never requires
When an employee earns a bonus that is considered to be a part of regular earnings, that bonus is classified as a(n) _____ bonus. Answer: A. incentive B. discretionary C. commission D. non-discretionary
non-discretionary
Bonus
planned or unplanned additional amounts
The original Social Security tax rate was _____ of taxable earnings.
1%
Patient Protection and Affordable Care Act was established in what year?
2010
A _____ is a voluntary deduction that can provide a variety of benefits to employees. Answer: A. cafeteria plan B. retirement plan C. medical plan D. defined contribution plan
A. cafeteria plan
In general, when the number of withholding allowances increases, the federal income tax withholding _____. Answer: A. decreases B. increases also C. is not affected D. decreases for some and increases for others
A. decreases
A _____ sets aside funds to be used for health-care expenses. Answer: A. flexible spending account B. Payroll Deduction IRA C. SIMPLE IRA plan D. 403(b) plan
A. flexible spending account
Which of the following is the earnings threshold over which an employee whose filing status is married filing separately will be subject to the additional Medicare tax? Answer: A. $117,000 B. $125,000 C. $200,000 D.
B. $125,000
When an employee reduces his/her withholding allowances, the employee is required to complete a new W-4 Form within ____ days. Answer: A. 3 B. 10 C. 15 D. 30
B. 10
A small business, for which the SIMPLE IRA plan is designed, consists of fewer than _____ employees. Answer: A. 50 B. 100 C. 500 D. 1,000
B. 100
The final figure in an employee earnings record is the _____. Answer: A. gross pay B. net pay C. check number D. hours worked
B. net pay
The _____ method is an alternative to the wage-bracket method for determining federal income tax withholding. Answer: A. mandatory deduction B. percentage C. Publication 15 D. state income tax withholding
B. percentage
Which of the following is true regarding wage garnishments? Answer: A. The wage garnishment may only be ordered by court order or other legal proceeding. B. The wage garnishment amount is based on disposable earnings. C. The wage garnishment limit can be increased for child support. D. All of these options
D. all of these options
FLSA
Dictates child labor restrictions
All local jurisdictions also impose a local income tax withholding on residents and nonresidents. Answer: A. True B. False
False
T/F: All voluntary deductions are subtracted from gross pay to arrive at the taxable earnings used for calculating Social Security tax.
False
By what date should the W-2 be furnished to employees and filed with the IRS? January 31st March 15th April 15 December 31st
January 31st
Employee receives a portion of the company's profits after exceeding a predetermined level
Profit-sharing
IRCA
Reduces illegal employment of foreign workers
Monies that can be tax-deferred and that are meant to benefit the employee later in life
Retirement plan
Paid leave after working a predetermined number of years
Sabbaticals
Which of the following is NOT an incentive plan? Answer: A. A stock option B. Cash for reaching a specified goal C. Sick pay D. Additional vacation days E. Profit-sharing plans
Sick pay
Employee may purchase shares of the business after meeting predetermined goals
Stock option
An employer must subtract tax-deferred contributions from gross pay to arrive at ____ pay. This represents a portion of gross pay used to calculate each of the mandatory deductions.
Taxable
Which of the following states does NOT collect state income tax on employee taxable income? Answer: A. Virginia B. Tennessee C. California D. Georgia E. None of these options
Tennessee
When pay dates occur once every other week, this is called a _____ pay period. Answer: A. weekly B. biweekly C. semimonthly D. monthly
biweekly
Tip credit
employees receive special minimum wage; employers must inform employees of using this
Flat tax
specific, identical dollar amount for each employee
T/F:Deductions for a SIMPLE IRA from gross earnings are exempt from federal income tax withholding.
true
Discretionary bonus
unplanned, not contingent on a specific goal; is not considered a part of regular pay
What is the definition of the term payroll period. A period that changes from week to week, based on hours worked A period of service for which an employer usually pay wages A period of at least two weeks for which an employee is compensated A full year of earnings for an employee
A period of service for which an employer usually pay wages
All of the cafeteria plan options listed below may be available to employees as voluntary nontaxable deductions except: Answer: A. Medicare B. Group-term life insurance C. Medical care reimbursements D. Adoption assistance
A. Medicare
_____ provide(s) benefits to temporarily disabled employees. Answer: A. State disability insurance B. Social Security tax C. Union dues D. Cafeteria plans
A. State disability insurance
Circular E
Also known as Publication 15. An employer's tax guide written by the IRS. Includes due dates for payroll forms, tables to calculate tax withholding, a summary of regulations, and IRS contact information.
Which must a company have before hiring employees? Employee training A Social Security administration card An employer identification number All of these options
An employer identification number
Items that are tax-deferred must have their contributing amounts subtracted from gross pay (before/after) determining federal income tax withholding. Examples: dependent care expenses, cafeteria plans, 401k and 403b retirement plans
Before
When using the wage-bracket method, the Federal Income Tax Withholding Tables display columns for up to _____ withholding allowances. Answer: A. 5 B. 8 C. 10 D. 480
C. 10
The contribution limit for a Payroll Deduction IRA increases once an employee reaches _____ years of age. Answer: A. 40 B. 45 C. 50 D. 55
C. 50
Which of the following is the correct title for Form W-4? A. Application for Employer Identification Number B. Application for a Social Security Card C. Employee's Withholding Allowance Certificate D. Employment Eligibility Verification
C. Employee's Withholding Allowance Certificate
An employee who is permitted to decline federal income tax withholding can write which of the following words within Form W-4 to indicate that no federal income tax should be withheld from his/her pay? A. Deduction B. Allowance C. Exempt D. Zero
C. Exempt
Which of the following states does NOT require employers to carry disability insurance for their employees? Answer: A. New York B. California C. Mississippi D. Hawaii
C. Mississippi
A workweek can differ from a ____ week.
Calendar
Monies received for reaching a specific sales/production goal
Cash incentive
Publication 15 is also referred to as _____. Answer: A. Circular B B. Circular C C. Circular D D. Circular E
Circular E
The annual contribution limit to a 401(k) plan is _____. Answer: A. $6,000 B. $7,000 C. $13,000 D. $19,000
D. $19,000
An updated W-4 Form must be processed by the employer no later than the start of the first payroll period that ends at least _____ days after the employee submits the form. Answer: A. 3 B. 10 C. 15 D. 30
D. 30
Which of the following method(s) can be used when determining federal income tax withholding? Answer: A. Wage-bracket method B. Percentage method C. Pay-as-you-go method D. Both the wage-bracket method and the percentage method E. All of these options
D. Both the wage-bracket method and the percentage method
In which of the following institution types may a 403(b) plan be made available to employees? Answer: A. Certain tax-exempt organizations B. Public education institutions C. Fortune 500 companies D. Certain tax-exempt organizations and public education institutions E. All of these options
D. Certain tax-exempt organizations and public education institutions
Withholding tables used for the wage-bracket method of determining federal income withholding can be found in _____. Answer: A. Form I-9 B. The payroll register C. Form W-4 D. Circular E
D. Circular E
Form _____ is used to verify an employee's identity and right to work in the United States. A. SS-5 B. W-4 C. SS-4 D. I-9
D. I-9
Within Form I-9, which of the following sections is only completed in certain circumstances? A. Section 1 (Employee Information Portion) B. Section 1 (Attestation Portion) C. Section 2 (Either List A Column or List B and List C Columns) D. Section 3
D. Section 3
What is the time requirement an employee has to increase the number of withholding allowances after getting married? Answer: A. 7 days B. 30 days C. 10 days D. There is no time requirement
D. There is no time requirement
Form SS-4 is used to request which of the following? Taxpayer identification number Employer identification number Withholding allowances Social security number
Employer identification number
Personal Responsibility and Work Opportunity Act of 1996
Enables better enforcement of child-support laws. Employers can satisfy the provisions of this act by submitting the newly hired employee's W-4 Form to the state.
Equal Pay Act of 1963
Enacted mainly to protect female employees and to prevent companies from payer lower wages to employees of the other gender for a similar job.
To comply with the _____ Act, an employer CANNOT reduce a wage rate to be the same as that of another employee of a different gender doing the same work. Answer: A. Equal Pay B. Fair Labor Standards C. Self-Employment Contributions D. Personal Responsibility and Work Opportunity
Equal Pay
Pay-as-you-go system
Establish as a result of the Current Tax Payment Act of 1943. Payments could no longer be made in the subsequent year, but instead must be paid in the year that the income is earned. Employers must withhold these taxes from employee pay and remit the withholdings to the federal government.
T/F: An employer should begin hiring employees before completing Form SS-4.
False
T/F: Employees who work nights or weekends receive overtime pay for all of their hours, even if NOT over the standard 40 hours.
False
T/F: Under no circumstances may additional withholdings above the contribution limit be made for either a 401(k) or 403(b) plan.
False
T/F:Relative to FICA taxes, the funds in a 401(k) plan are tax-deferred.
False
T/F:The Employee Retirement Income Security Act (ERISA) requires that employers offer retirement plans to their employees.
False
Taxable income represents the portion of gross pay after all deductions have been subtracted. Answer: A. True B. False
False
The columns in the payroll register CANNOT be modified. Answer: A. True B. False
False
T/F: Marital status appears on a W-4 Form but NOT on a paystub.
False. It appears on both.
Piecework system
For employees who produce a measurable output (such as seamstresses created dresses), compensation may be based on the number of units produced.
If a state establishes a minimum wage that is lower than the federal minimum wage, the _____ minimum wage must be paid. Answer: A. higher B. lower C. average D. earliest established
Higher
If an employee's state mandates a higher minimum wage than the current federal minimum wage of $7.25/hour, the employee is required to be paid at least the ____ state rate.
Higher
Which of the following is an acceptable solution for an employer if there is a disparity in wages between opposite genders for the same work? Answer: A. Nothing, disparities are allowed. B. Decrease the higher wage so it equals the lower wage. C. Increase the lower wage so it equals the higher wage. D. All of these options.
Increase the lower wage so it equals the higher wage.
Form W-4
Indicates the number of tax allowances being claimed. This provides the employer with information necessary to calculate both federal income tax withholding and applicable state income tax withholding.
Federal income tax withholding, state income tax withholding, local income tax withholding, social security tax (1937) (OASDI), medicare tax (HI), and state disability insurance tax are all ____ deductions.
Mandatory
What reasons are eligible for changing a W-4 form?
Marriage, divorce, birth of a child, job status change
What are the pay restrictions for a tipped employee?
May be paid $2.13/hour, as long as their tips, when added to this amount, equal or exceed the federal minimum wage. They must receive at least $30 in tips per month. Any deficit will be made up by the employer.
Funds withheld for medical expenses that can roll over and can be used in subsequent years
Medical plans
Must income tax withholding be handled differently for part-time workers than for full-time workers?
No
A hospital employee is paid $6.95/hour. Is this compliant or non-compliant with the Fair Labor Standards Act?
Non-Compliant
A student learner in a qualified vocational program earns $5.50/hour. The employer has not yet applied for an authorizing certificate. Is this compliant or non-compliant with the Fair Labor Standards Act?
Non-compliant
This method has three steps for calculating tax 1. Multiple the allowances by the figure in the allowance table. 2. Subtract the allowance from taxable pay 3. Use the ___ ___ method table to calculate tax
Percentage Method
What act occurred in 1996?
Personal Responsibility and Work Opportunity Reconciliation Act
What is it called when an employee is paid by producing a measurable output? Answer: A. An independent contractor B. Piecework C. A tipped employee D. None of these options
Piecework
T/F: Five states (CA, HI, NJ, NY, RI) require that disability insurance be withheld from employee pay. With these funds, the states provide benefits to temporarily disabled employees who are unable to work as a result of a non-work-related circumstance.
True
T/F: Gross pay is the amount earned by the employee before any deductions have been subtracted.
True
T/F: If any employee dies during the course of their employment, workers' compensation insurance may provide a death benefit to the employee's beneficiary.
True
T/F: In addition to timecards, badge terminals and biometric terminals can also be used as timekeeping methods.
True
T/F: In the majority of circumstances, employers may NOT pay a lower wage to an employee of the opposite gender for a similar job.
True
Salaried employee
paid annually. Annual salary/52 weeks
Wage-earning employee
paid on an hourly basis. Regular wage rate x regular hours worked.
Which of the following groups does NOT represent an exception to the federal minimum wage? Workers with disabilities Student learners in a vocational school An employee under 20 years of age A part-time student working for a college None of these options
part-time student working for a college
People employed by large businesses with revenues greater than $500,000, governmental agencies (local, state, or federal), hospitals, schools, and domestic workers and employees working for interstate commerce businesses must do what?
pay the minimum wage
T/F: Weekly, biweekly, semimonthly, and monthly are all common pay period options.
True
Form I-9
Completed by the employee; acceptable documents are verified by the employer This document verifies that the employee is permitted to work in the United States.
A federal government employee earns $7.48/hour. Is this compliant or non-compliant with the Fair Labor Standards Act?
Compliant
Employee Earnings Record
Contains key employee and payroll information. Summarizes annual payroll figures. Facilitates completion of payroll tax forms.
The E-Verify system compares employee information with information found in the records at the Social Security Administration and the United States Department of _____. A. Labor B. State C. the Treasury D. Homeland Security
Homeland Security
What are the pay restrictions for a young worker (under 20 years old)?
May be paid $4.25/hour for the first 90 days of employment, as long as they do not replace another employee. The pay then reverts to the federal minimum after 90 days or after the employee turns 20, whichever occurs first.
What are the pay restrictions for a student learner enrolled in a vocational school?
May be paid 75% of the federal minimum wage, as long as they remain in the educational program while employed. Employers must obtain an authorizing certificate from the U.S. Department of Labor to pay these reduced wages.
What are the pay restrictions for a full-time student when working for specific employers (colleges and universities, agriculture, and retail or service stores)?
May be paid 85% of the current minimum wage rate, and are limited to a maximum of 8 hours/day, 20/hours/week while school is in session.
What are the pay restrictions for a person with a disability?
May be paid a percentage of the current prevailing wage rate for a comparable position and is based on the productivity level of the employee with the disability.
Which of the following is NOT considered an earning category on a paystub? Holiday Regular Medicare Overtime
Medicare
An employee at a local bakery begins working on June 1. He turns 20 on October 14 and earns $4.25/hour during his first six months of employment. Is this compliant or non-compliant with the Fair Labor Standards Act?
Non-compliant
T/F: San Francisco's minimum wage rate is higher than the applicable federal and state rates in California.
True
Non-discretionary bonus
Planned, paid on meeting a specific metric; considered part of regular pay; must be combined with regular hourly wages to determine overtime pay
When Section 1 of Form I-9 is completed by a person other than the employee, the _____ and/or _____ Certification section must be completed. A. Preparer, Translator B. Employer, Authorized Representative C. Preparer, Authorized Representative D. Employer, Translator
Preparer, Translator
Self-employment income
Revenue claimed minus expenses incurred; must track total income to pay appropriate taxes
When completing form SS-5, lines 9 and 10 require that the applicant enter their parents' names and _____. Answer: A. birthdates B. addresses C. Social Security numbers D. number of federal allowances
Social Security numbers
T/F: The number of allowances an employee claims on the W-4 Form can be a different amount than the number of exemptions claimed on the employee's personal tax return.
True
T/F: A salaried employee's annual pay must be converted to an hourly rate in order to calculate overtime for any hours worked over 40 in a week.
True
T/F: Net pay is the amount on the employee's paycheck.
True
Which age group may only perform specific activities, such as newspaper delivery and working for their parents' sole proprietorships? - Under 14 years of age - Ages 14 and 15 - Ages 16 and 17
Under 14 years of age
Form SS-4
Used to obtain an Employer Identification Number (EIN)
If payday falls on a Friday for a semiweekly depositor of Social Security, Medicare, and withheld income taxes, by what day of the following week must taxes be deposited? Tuesday Wednesday Thursday Friday
Wednesday
Payroll register
shows each employee's pay for a single period
Which age group may work a variety of jobs outside of manufacturing and mining, but are subject to extensive hour limitations? - Under 14 years of age - Ages 14 and 15 - Ages 16 and 17
Ages 14 and 15
When completing the Personal Allowances Worksheet, 1 is always added to the total if the employee's tax return filing status is _____. Answer: A. single B. separated C. head of household D. married filing separately
C. head of household
T/F: The schedule an employer uses for paying its employees is called the pay period.
True
When completing an employee earnings record, which of the following items is entered for each pay period? A. Regular pay rate B. Marital status C. Federal withholding allowances D. State withholding allowances
A. Regular pay rate
When completing Form I-9, which combination of documents listed below is acceptable? A. Voter's registration card and Native American tribal document B. Certification of Birth Abroad issued by the Department of State and Identification Card for Use of Resident Citizen in the United States C. School ID card with a photograph and school record or report card D. Military dependent's ID card and U.S. Coast Guard Merchant Mariner Card
A. Voter's registration card and Native American tribal document
How can employers satisfy the requirement for workers' compensation?
By purchasing it from a state-operated fund or private insurance carrier, or by becoming authorized by the state to be self-insured.
Payroll Service
Calculates employee net pay, generates paychecks, completes and files monthly, quarterly, and annual payroll tax forms. Benefits of use include avoiding potential penalties with mishandling payroll and reducing the amount of time spent on payroll tasks.
How can incentives be paid to the employee?
Cash in lump sum, profit-sharing plans, options to purchase stock with pre-tax dollars, additional vacation days for employees whose tenure with the company surpasses preset lengths, sabbaticals that provide employees with paid leave after working for a predetermined number of years.
E-verify
Compares information from employee with that possessed by various government agencies such as the Social Security Administration and the United States Department of Homeland Security.
A full-time student, who works for a local college, earns $7.20/hour for working four hours per day, four days a week, during the school year. Is this compliant or non-compliant with the Fair Labor Standards Act?
Compliant
The federal minimum wage was established in 1938 when the _____ was passed into law. A. Fair Labor Standards Act B. Self-Employment Contributions Act C. Immigration Reform and Control Act D. Employee Retirement Income Security Act 1974
Fair Labor Standards Act
What act occurred in 1938?
Fair Labor Standards Act
T/F: A workweek is defined as always running from Sunday through Saturday, beginning at 8:00 a.m.
False
Immigration Reform and Control Act of 1986
Intended to reduce illegal employment of foreign workers in the U.S.
Form SS-5
Used to obtain a Social Security number
Which groups of people are exceptions to the federal minimum wage requirement?
Workers with disabilities, full-time students, young workers, tipped employees, student learners.
An employer can designate any 7-day period as a _____ as long as it begins and ends consistently each week. Workweek Vacation Pay period Payday
Workweek
Commission
a percentage of each sale; can be either the only form of earned income or may be earned in conjunction with a salary.
Pay disparity is allowed under which circumstances?
a seniority system, a merit system, a system based on quantity or quality of input, other non-gender-based systems
TIp pool
all employee tips are added together and then dived among employees
