ACCT 160 Chapter 02 Study Guide

Employers may choose to omit the employees' Social Security numbers in their employee files. true or false

false

It is considered a best practice to assign one employee all payroll duties. true or false

false

Pay rate is the first payroll system decision a company must make. true or false

false

The format of the Employee Information Form is standardized by federal law. true or false

false

United States workers in foreign subsidiaries are exempt from all income taxes. true or false

false

A worker who sells life insurance on a full-time basis is considered a statutory employee. true or false

true

Biweekly payroll may result in 27 pay periods during a one-year period. true or false

true

Foreign workers in the United States are subject to new hire reporting regulations. true or false

true

Only regular working hours are considered as the worked hours for overtime computation. true or false

true

The two focuses of payroll procedures are company needs and governmental rules. true or false

true

A company should assign ________ employee(s) the responsibility for signing payroll checks and disbursements. A) A limited number of B) Only one C) Its most responsible D) None of the choices are correct.

A) A limited number of

Which pay frequency has 12 pay periods? A) Daily B) Weekly C) Monthly D) Semimonthly

C) Monthly

Why must pay period information be a part of an employee's payroll file? A) As a means of tracking time worked for overtime compensation purposes. B) To ensure that the employee receives all compensation earned. C) As a means of ensuring pay equality among employees. D) To document satisfaction of court-ordered obligations.

A) As a means of tracking time worked for overtime compensation purposes.

A company should restrict access to payroll files (paper and/or electronic) as a part of ________. A) File security internal controls B) Audit trail requirements C) Compliance with company policy D) FATCA requirements

A) File security internal controls

Why is it important for an employer to classify a worker as either an employee or an independent contractor? A) For tax reporting purposes B) For child support obligations purposes C) For government tracking purposes D) For reimbursement purposes

A) For tax reporting purposes

Josh who is 21 years of age is a new employee of XYZ Company. To establish his identity and employment authorization he could present: A) His current United States passport. B) His library card and birth certificate. C) His driver's license and ATM card. D) His college transcript and driver's license.

A) His current United States passport.

Upon termination which of the following must be included in an employee's final pay? A) Hours worked. B) Vacation previously paid. C) Severance pay. D) Sick time accrued but not used.

A) Hours worked.

Which of the following is an example of a typical exempt salaried employee? A) Operations Manager B) Accounting Clerk C) Administrative Assistant D) Machine Operator

A) Operations Manager

What is the difference between termination and resignation as far as final pay is concerned? A) Resignation pay may be paid at the next regular pay date but termination pay is subject to state law. B) Resignation and termination pay are subject to state regulations. C) Resignation pay must be paid within one week and termination pay must be the next business day. D) Resignation pay must be paid on the next business day and termination pay is due immediately.

A) Resignation pay may be paid at the next regular pay date, but termination pay is subject to state law.

Which entity bears the responsibility for gaining approval for a foreign worker visa so a foreign employee may work legally in the United States? A) The employer B) The employee C) The U.S. State Department D) The employer's home country

A) The employer

Max Johnson was terminated from a company in South Carolina because of a reduction in workforce. Which statement best describes the state's requirements for disbursement of his final pay? A) Within 48 hours. B) At the next scheduled pay date. C) On the next business day. D) Within two weeks.

A) Within 48 hours.

IRS Regulation 26 CFR 1.6001 mandates ________ procedures as they pertain to payroll records noting that it is the responsibility of the ________. A) file maintenance & employer B) payroll review & payroll supervisor C) check authorization & controller D) employee time review & department manager

A) file maintenance & employer

FATCA enforcement has been difficult because the Internal Revenue Service relies on ________ for reporting purposes. A) intermediaries (e.g. banks) B) employers and employees C) foreign countries D) personal income tax returns

A) intermediaries (e.g. banks)

The IRS stipulates that no more than ____ percent of a company's employees may be leased employees. A) 10 B) 20 C) 30 D) 40

B) 20

When a payroll clerk receives an approved request for an employee's time away from work he or she should: A) Immediately place it in the employee's file. B) Attach it to the employee's time collection report for the pay period. C) Destroy the document in accordance with privacy laws. D) Contact the employee to verify the request.

B) Attach it to the employee's time collection report for the pay period.

Which pay frequency has 26 or 27 pay periods per year? A) Bimonthly B) Biweekly C) Semimonthly D) Semi-weekly

B) Biweekly

Georgeanne works in a company for which her primary job function is the sale of company products to consumers. She receives a percentage of each sale as part of her compensation. Her compensation contains a ________ element. A) Piece-rate B) Commission C) Pay-for-performance D) Nonexempt

B) Commission

Form I-9 is issued by the ________ to verify employment eligibility in the United States. A) Internal Revenue Service B) Department of Homeland Security C) Federal Bureau of Investigation D) Department of Labor

B) Department of Homeland Security

When developing the internal controls and record retention for a payroll system a company should: A) Involve all company employees to promote transparency. B) Develop a closed system and alternate employee duties. C) Designate a single employee with the responsibility for pay disbursements. D) Train accounting personnel on a single payroll task.

B) Develop a closed system and alternate employee duties.

Employee file maintenance is the responsibility of the: A) Employee. B) Employer. C) Payroll vendor. D) State government.

B) Employer.

According to the Fair Labor Standards Act nonexempt workers receive overtime for: A) Hours worked in excess of 8 per day and 30 per week. B) Hours worked in excess of 40 per week. C) Hours worked in excess of 9 per day or 35 per week. D) Hours worked in excess of employer-determined rules.

B) Hours worked in excess of 40 per week.

The ________ mandated that new hires must be reported within ________ days to state authorities. A) Fair Labor Standards Act & 30 B) Immigration Reform and Control Act & 20 C) Civil Rights Act & 25 D) Davis-Bacon Act & 28

B) Immigration Reform and Control Act & 20

Natalie is involuntarily terminated by a company in Alabama. According to state regulations when must she receive her final pay? A) On the next business day B) No standardized state guidelines exist C) Within seven business days D) At the next schedule payday

B) No standardized state guidelines exist

Which of the following is true about document retention requirements per the IRS statute of limitations? A) Federal legislation requires documents to be retained for two years after the employee's termination. B) Payroll records must be maintained for three years after termination. C) Union employees' records must be retained for five years after termination. D) State legislation requires records to be retained for a minimum of eight years after termination.

B) Payroll records must be maintained for three years after termination.

Outsourcing the payroll process: A) Relieves the company of the task completion and the review process. B) Relieves the company of certain task completion but not the review process. C) Relieves the company of all liability for payroll completion and accuracy. D) Relieves the company of the review process but not the task completion.

B) Relieves the company of certain task completion but not the review process.

Ibrahim is the payroll accountant for a firm. He notes that the firm has hired a new employee. What forms must he collect from the new employee? A) W-2 and I-9 B) W-4 and I-9 C) W-4 and I-8 D) W-3 and I-9

B) W-4 and I-9

Allen is an employee of the foreign subsidiary of a United States based company who lives and works in the United Kingdom. According to FATCA how much of his wages may Allen exclude from United States' taxes according to 2020 guidelines? A) $47,400 B) $80,750 C) $107,600 D) None of the choices are correct.

C) $107,600

Allen is an employee of the foreign subsidiary of a United States based company who lives and works in the United Kingdom. According to FATCA how much of his wages may Allen exclude from United States' taxes according to 2020 guidelines? A) $46,500 B) $79,850 C) $107,600 D) None of the choices are correct.

C) $107,600

Which of the following parties does not legally have access to a firm's payroll records? A) The IRS B) State revenue department employees C) All employees of the firm D) The Department of Homeland Security

C) All employees of the firm

All executive compensation must be: A) Maintained in a file and purged annually. B) Available for inspection by any interested party. C) Annotated as to derivation and benchmarks. D) Reported with the company's financial statements.

C) Annotated as to derivation and benchmarks.

________ payroll is processed every two weeks and will usually result in a lower gross pay per pay period than ________ payroll. A) Weekly & monthly B) Semimonthly & biweekly C) Biweekly & semimonthly D) Daily & biweekly

C) Biweekly & semimonthly

Computerized payroll records are considered a(n): A) Open system. B) Open access. C) Closed system. D) Closed access.

C) Closed system.

Which aspect of internal controls for payroll relates to the Sarbanes-Oxley Act? A) Protecting employee retirement funds B) Limiting the number of employees authorized to disburse payroll C) Cross-training employees and altering duties D) Ensuring the complexity of the audit trail

C) Cross-training employees and altering duties

If a firm pays its employees biweekly how often does it disburse employee compensation? A) Twice per week B) Every week C) Every two weeks D) Every three weeks

C) Every two weeks

Geoff is the payroll clerk for a firm that maintains its payroll through computerized records on a centralized server. One of his responsibilities is employee file maintenance including the destruction of records after the retention time has elapsed. His method of purging employee records is to delete the file from the database. What other record destruction procedures should Geoff follow? A) None. His method is acceptable. B) He should check all other employees' computers to ensure that the record is deleted. C) He should purge the record from the server. D) He should send an interoffice request to have someone in the information technology department remove the record from the server.

C) He should purge the record from the server.

Mako was an employee of the Jaeger Corporation. After she voluntarily terminated employment auditors discovered evidence of fraudulent activity that they traced to her. Mako's records must be retained: A) For 40 years. B) For 25 years. C) Indefinitely. D) For 24 years.

C) Indefinitely.

Stan works for a bakery for which part of his compensation is based on the decoration of wedding and other specialty cakes. His compensation has a ________ element. A) Performance incentive B) Commission C) Piece-rate D) Nonexempt

C) Piece-rate

Which pay frequency has 24 pay periods annually? A) Weekly B) Biweekly C) Semimonthly D) Semi-weekly

C) Semimonthly

Adrienne is a nonexempt employee who works for a firm that has an elected workweek composed of four 10-hour days and pays overtime after 40 hours worked per week. What is the rule about overtime for her work situation? A) She must be compensated for all hours worked past 8 in a single day. B) She will receive overtime pay when working more than 10 hours during a shift. C) She receives overtime only when she works past 40 hours in any given week. D) She is not eligible for overtime pay.

C) She receives overtime only when she works past 40 hours in any given week.

Personnel in certain full-time occupations are classified as ________ instead of independent contractors. A) Contract employees B) Executive workers C) Statutory employees D) Non-statutory workers

C) Statutory employees

A payroll accountant is preparing the final pay for a commission-based salesperson who has been terminated from the firm. What will happen to the salesperson's commissions that have been earned but not paid? A) The salesperson must receive termination pay immediately and forfeits all unpaid commissions. B) The salesperson's final pay is delayed to allow for computation of commissions. C) The final pay must include all commissions earned in accordance with any pay agreement. D) The employee must receive final non-commission pay immediately but any commission pay will be delayed.

C) The final pay must include all commissions earned, in accordance with any pay agreement

Which of the following is subject to overtime in the process of hourly computations according to FLSA? A) Time worked in excess of eight hours per day B) Holiday sick time and paid time off C) Time worked in excess of 40 hours per week D) Nonexempt employee weekend work

C) Time worked in excess of 40 hours per week

A ___________ employee is eligible for company benefits whereas a ________ employee is not. A) independent contractor & temporary B) temporary & part-time C) leased & temporary D) temporary & leased

C) leased & temporary

Payroll records that contain evidence of fraud or other illegal action must be ________. A) retained for two years B) destroyed immediately C) retained indefinitely D) released to law enforcement officials

C) retained indefinitely

An employer must have an employee complete Form W-4: A) Before each pay disbursement. B) Each year upon the employee's anniversary with the firm. C) Every January 1. D) At the time of hire.

D) At the time of hire.

________ pay is based on sales revenue while ________ pay is based on manufacturing. A) Exempt & nonexempt B) Commission & overtime C) Piece-rate & commission D) Commission & piece-rate

D) Commission & piece-rate

Jeremiah is a salaried exempt worker whose standard workday consists of eight-hour shifts. During a workweek he exceeded eight hours of work on two separate days but did not exceed 40 hours during the work week. What is the FLSA provision for the time that he worked past eight hours in a single day? A) He must be compensated at overtime rates for any hours past eight in a single day. B) He must reduce the time he works on subsequent days. C) He must alert his manager of the extra time on the next business day. D) He will receive no additional compensation for the extra time worked.

D) He will receive no additional compensation for the extra time worked.

Mako was an employee of the Jaeger Corporation. After she voluntarily terminated employment auditors discovered evidence of fraudulent activity that they traced to her. Mako's records must be retained: A) For 10 years. B) For 15 years. C) For 20 years. D) Indefinitely.

D) Indefinitely.

Individuals classified as ________ are processed as vendors of a firm. A) Exempt employees B) Nonexempt employees C) Government contract employees D) Independent contractors

D) Independent contractors

Which items must be contained in every hiring packet issued by an employer? A) Forms W-4 and I-9 B) Employment contract with start date and pay agreement C) Descriptions of benefits and enrollment forms D) No items are mandated for issuance in a hiring packet.

D) No items are mandated for issuance in a hiring packet.

Which of the following items must exist in every employee's payroll file? A) Spouse's social security number B) Employment history C) Spouse's birth date D) Occupation

D) Occupation

What is the difference in pay practices between salaried exempt and salaried nonexempt workers? A) Salaried exempt workers may only work eight hours per day. B) Salaried nonexempt workers must not work overtime hours. C) Salaried exempt workers must work between 45 and 50 hours per week. D) Salaried nonexempt workers are eligible for overtime pay.

D) Salaried nonexempt workers are eligible for overtime pay.

Abigail is a full-time worker whose primary occupation involves extensive overnight travel to visit wholesaler sites on the behalf of a single company. Which of the following classifications most accurately describes Abigail's employment status? A) Independent contractor B) Exempt employee C) Nonexempt employee D) Statutory employee

D) Statutory employee

A payroll review process increases in complexity when: A) The company has few departments and few employees. B) The company is not geographically dispersed. C) The company is centralized and uses one location. D) The company has multiple departments and many employees.

D) The company has multiple departments and many employees.

For payroll documentation purposes when an employee needs time away from work: A) The supervisor should authorize it verbally. B) The employee should email only department colleagues. C) Upper management must approve the request. D) The request should be documented and forwarded to the payroll clerk.

D) The request should be documented and forwarded to the payroll clerk.

30) The retention period for payroll documents commences: A) At the time an employee is hired. B) When an employee's first pay is disbursed. C) Once the employee completes one year of service. D) When an employee terminates employment.

D) When an employee terminates employment.

Regulation ______ mandated disclosure of paycard-relation information and fees to employees. A) E B) H C) P D) Z

D) Z

Upon termination from a firm the employer must disburse the former employee's final pay ________. A) immediately B) within 24 hours C) at the next scheduled payday D) in accordance with state law

D) in accordance with state law

Verification of hours worked and pay accuracy is part of the ________. A) disbursement cycle B) accounts payable reconciliation C) CEO's responsibility D) payroll review process

D) payroll review process