2018 CPP Practice Exam

A company has current assets of $150,000.00, other assets of $140,000.00, revenue of $590,000.00, expenses of $430,000.00, current liabilities of $105,000.00, and long-term liabilities of $135,000.00. What is the company owner's equity? A. $45,000.00 B. $50,000.00 C. $210,000.00 D. $55,000.00

B. $50,000.00

ABCco filed Forms 1099-MISC for workers that should have been classified as EEs. What penalties will be assessed to for improper worker classification? A. 40% of FICA and 3.0% of FIT B. 20% of FICA and 1.5% of FIT C. 100% of FICA and 100% of FIT D. 97% abatement

B. 20% of FICA and 1.5% of FIT

A retirement plan in the form of an annuity or mutual fund for the EEs of public sector ERs is: A. 403(b) B. 457 C. 401(k) D. 414(h)

B. 457

Tip allocations are needed if the total tips reported are less than what % of ER's gross receipts? A. 10% B. 8% C. 12% D. 28%

B. 8%

An annuity that provides retirement income for EEs of certain public schools and certain non-profit organizations is: A. 403(b) B. 457 C. 401(k) D. 414(h)

A. 403(b)

ER's Annual Information Return of Tip Income and Allocated Tips is Form: A. 8027 B. 5500 C. 8109 D. SS8

A. 8027

On form W-2, what box is used to report wages, tips, and other compensation? A. Box 1 B. Box 10 C. Box 12 D. Box 14

A. Box 1

What journal entries are required to record $250,000.00 in salaries earned during the last week of July but paid in Aug? A. Debit salary expense; credit salary payable B. Debit salary payable; credit payroll checking C. Debit liabilities; credit salary expense D. Debit assets; credit salary expense

A. Debit salary expense; credit salary payable

BOX 12 CODE: Uncollected social security tax on tips

A

What is the annual limit of an EE Dependent Care Assistance account? A. $5,000 B. $7,500 C. No limit D. $8,000

A. $5,000

Payments to independent contractors must be reported to the IRS if payments meet or exceed: A. $600 for the year B. $600 in the last 12 months C. $1,000 for the year D. $1,500 for the year

A. $600 for the year

The amount of federal income tax that must be withheld from non-wage payments to an individual who has failed to provide a taxpayer identification number (TIN) is: A. 28% B. 31% C. 20% D. 25%

A. 28%

Which statement below defines "Tax Deferred" wages and "Tax Exempt" wages? A. "Tax Deferred" means that taxes will be due at some later period in time. "Tax Exempt" means that taxes will never be due. B. "Tax Deferred" means that taxes will never be due. "Tax Exempt" means that taxes will be due at some later period in time. C. "Tax Deferred" and "Tax Exempt" both mean that taxes will never be due. D. "Tax Deferred" and "Tax Exempt" both mean that taxes will be due at some later period in time.

A. "Tax Deferred" means that taxes will be due at some later period in time. "Tax Exempt" means that taxes will never be due.

Wages are paid on Wednesday, Mar 26, resulting in a deposit liability of $90,000. Wages are paid again on Thursday, Mar 27, resulting in a deposit liability of $12,000. Assume that Tuesday, Apr 15, is a nonbanking day. Under the semiweekly deposit rule, when are the deposits due? A. $102,000 is due on Friday, March 28 B. $102,000 is due on Wednesday March 26 C. $102,000 is due on Thursday March 27 D. $102,000 is due on Tuesday, April 1

A. $102,000 is due on Friday, March 28

Exempt, hourly paid computer professionals must be paid not less than how much per hour? A. $27.63 B. $33.48 C. $4.75 D. $5.15

A. $27.63

ERISA stands for: A. Employee Retirement Income Security Act B. Employer Reporting Insurance Standards Act C. Employer Required Insurance Security Act D. Employment Reconciliation Income Standards Act

A. Employee Retirement Income Security Act

An ER has received multiple attachments for an EE. The orders were received in the following sequence: Federal tax levy, consumer garnishment, and child support payment order. In which order are the attachments applied against the EE's wages? A. Federal levy, child support payment, consumer garnishment B. Child support payment, consumer garnishment, federal levy C. Child support payment, federal levy, consumer garnishment D. Federal levy, consumer garnishment, child support payment

A. Federal levy, child support payment, consumer garnishment

An ER that pays contributions to more than one state UI fund must file: A. Form 940 B. Form 944 C. Form 941 D. Form 941c

A. Form 940

An EE who works for more than one ER and has exceeded the SS wage base may: A. Get a refund on their personal income tax return B. Demand that the ER refund the coverage C. Apply the Social Security tax to next year's withholdings D. Apply the overage to benefits paid at age 65

A. Get a refund on their personal income tax return

Which management theory reviews the differences between managers and leaders? A. Kotter B. Covey C. Hershey, Blanchard, Johnson D. Principle-Centered Leadership

A. Kotter

What is a key advantage of processing payroll with a service provider compared to an in-house payroll system? A. No initial investment, no maintenance B. Enhanced communications capability C. Cost-effective resource and data sharing D. Convenience

A. No initial investment, no maintenance

Where do taxable Medicare wages get reported? A. On line 5c of Form 941 B. On line 2 of Form 941 C. In box 3 of Form W-2 D. In Part 1 of Form 940

A. On line 5c of Form 941

Which of the following must be obtained from new EEs? A. Social Security Card B. W-4 C. I-9 D. W-2

A. Social Security Card

From what taxes are cafeteria plan contributions generally exempt? A. SS, Medi, FIT, and FUTA B. FIT and SIT C. SS, Medi, FUTA, and SUI D. SS, Medi, FIT, and SIT

A. Social Security, Medicare, FIT, and FUTA

Under the FLSA, all of the following records are required to be retained for at least three years from the last date they were in effect EXCEPT: A. Timecards B. Collective bargaining agreements C. Certificates authorizing the employment of minors D. Records showing total sales volume and goods purchased

A. Timecards

When an ER receives Form 668-W from the IRS, when must the ER begin to withhold and remit? A. With the first payment of wages after receipt of Form 668-W B. Within 14 days after receipt of Form 668-W C. Within 30 days after receipt of Form 668-W D. Within 30 days after receipt of Form 668-W or the first date of payment of wages, whichever is later

A. With the first payment of wages after receipt of Form 668-W

BOX 12 CODE: Designated Roth contributions under a section 401(k) plan

AA

Which is not true of an accountable plan? A. EEs must have paid or incurred deductible expenses while performing services as your EEs. B. Amounts paid to EEs under an accountable plan are wages and are subject to income tax withholding. C. EEs must adequately account to you for expenses within a reasonable period of time. D. EEs must return any amounts in excess of expenses within a reasonable period of time.

B. Amounts paid to employees under an accountable plan are wages and are subject to income tax withholding.

A manager who prefers facts over speculation and insists on real-world proof indicates the communication style defined as: A. Introspective B. Assertive C. Expressive D. Supportive

B. Assertive

A manager building a successful team must deal with EEs who have different personal styles. Each of the following styles is represented on a team other than: A. Contributors B. Controllers C. Collaborators D. Communicators

B. Controllers

When a company purchases a computer on credit for $2,500, which of the following journal entries is made? A. Debit assets and debit liabilities B. Debit assets and credit liabilities C. Credit assets and debit liabilities D. Credit assets and credit owner's equity

B. Debit assets and credit liabilities

The journal entries required to record federal income tax withheld are: A. Debit tax expense, credit federal income tax withheld B. Debit salary payable, credit federal income tax withheld C. Debit tax payable, credit cash D. Debit cash, credit tax expense

B. Debit salary payable, credit federal income tax withheld

Which W-2 Box 12 code is used for a 403(b) plan? A. F B. E C. D D. K

B. E (E for Education)

An ER must file a Form 940 if: A. EEs were employed on any day in the current or preceding calendar year B. EEs were employed on any day in any 20 weeks in the current or preceding calendar year C. EEs were employed on any 20 different days in the current or preceding calendar year D. 20 EEs or more were employed on any day in the current or preceding calendar year

B. Employees were employed on any day in any 20 weeks in the current or preceding calendar year Reference Section 7.1 - 1 Who Must Pay FUTA Tax

After a new system has been selected and approved, what is the next step in the selection process? A. Specify scope B. Implementation C. Review D. Define requirements

B. Implementation

The taxable and tax amounts for ER paid GTL premiums for coverage over $50,000 are reported on the W-2 as: A. Excluded from Box 1, included in Boxes 3 and 5, Box 12 coded "C" B. Included in Boxes 1, 3 and 5, Box 12 Code "C" C. Included in Boxes 1, 2, 3, and 5, Box 12 coded "G" D. Excluded from Box 1, included in Boxes 3 and 5, Box 12 coded "G"

B. Included in Boxes 1, 3 and 5, Box 12 Code "C"

Nontaxable 3PSP is reported in Box 12, preceded by which of the following codes? A. M B. J C. C D. P

B. J

The Experience Rate System: A. Measures the amount of experience that EEs have in order to determine job placement B. Measures the unemployment claims activity of the ER for purposes of determining the ER's unemployment tax rate C. Measures the unemployment claims activity of the EE for purposes of determining the EE's unemployment tax rate D. Measures an EE's experience for purposes of determining promotion eligibility

B. Measures the unemployment claims activity of the employer for purposes of determining the employer's unemployment tax rate

If an ER is unable to collect SS/MED due on an EE's reported Tip Income, the ER must: A. Pay the EE's share of SS/Medi B. Report the uncollected amount on the EE's W-2 in Box 12, coded "A" for SS, "B" for Medi C. Report the uncollected amount in Boxes 4 and 6 on the EE's W-2 D. Not report the uncollected amount until it is collected from the EE

B. Report the uncollected amount on the EE's W-2 in Box 12, coded "A" for SS, "B" for Medicare

What is a warning or alert called that is built into the system that checks for errors and either corrects the error or notifies the operator that something may be wrong? A. Monitor edit B. System edit C. Control edit D. Procedure edit

B. System edit

Federal law prohibits the employment of minors: A. Under the age of 14 under any circumstances B. Under the age of 14 except by a parent or in certain jobs C. Under the age of 15 under any circumstances D. Under the age of 16 except by parent or in certain jobs

B. Under the age of 14 except by a parent or in certain jobs

At the beginning of the year an EE elects to buy medical and dental as a part of the company's cafeteria plan. During the year the EE has the option to change benefits: A. At any time B. Upon a qualifying event C. Never D. By filling out a new W-4

B. Upon a qualifying event

What documents have a two-year retention period? A. The EE's occupation B. Work time schedules C. Hospital workers' agreements to 8/80 plan D. Form I-9

B. Work time schedules

BOX 12 CODE: Designated Roth contributions under a section 403(b) salary reduction agreement

BB

BOX 12 CODE: Value of Group Term Life Insurance (GTL) over $50,000

C

What journal entry is posted as a debit (DR)? A. $5,000.00 paycheck, posted to the checking account B. $10,000.00 withheld taxes, posted to liability account C. $15,000.00 deposit of withheld taxes, posted to liability account D. $55,000.00 payroll tax liability, posted to liability account

C. $15,000.00 deposit of withheld taxes, posted to liability account

Bob lives in Vermont and works in New York. Vermont has a state minimum wage of $8.06 per hour and New York has a state minimum wage of $7.25 per hour. What is the least hourly rate that Bob's ER may pay him? A. $8.06 B. $6.55 C. $7.25 (based on state where he's working, not living) D. Either A, B, or C - ER may choose

C. $7.25 (based on state where he's working, not living)

The final FUTA payment for the year is due on: A. 01/15 B. 12/31 C. 01/31 D. 02/15

C. 01/31

How long must an EE's W-4 be retained by an ER? A. 3 years B. 10 years C. 4 years D. 5 years

C. 4 years

The Annual Return/Report of EE Benefit Plan is Form: A. 8109 B. SS8 C. 5500 D. 8027

C. 5500

Which form notifies an ER that an EE's wages have been released from a levy? A. 843 B. 668 - W C. 668 - D D. 673

C. 668 - D

Which of the following plans BEST describes a cafeteria plan under Section 125 of the IRC? A. A quantified and accountable expense reimbursement plan B. A tax-qualified retirement plan which meets special needs C. A plan which permits EEs to select from two or more qualified taxable and nontaxable benefits D. A plan whereby EEs may request that pretax dollars be set aside in a qualified retirement account until age 59

C. A plan which permits employees to select from two or more qualified taxable and nontaxable benefits

Bob is a real estate agent. His office expects him to be available in the office from 9:00 am to 3:00 p.m. and from 6:00 p.m. to 9:00 p.m. daily . Bob is: A. An independent contractor B. A statutory EE C. A statutory nonEE D. An EE

C. A statutory nonemployee

Bob gets injured on the job and receives workers' compensation benefits. These benefit payments are exempt from: A. EE/ER SS and Medi B. Federal C. All employment tax and withholding D. Medi only

C. All employment tax and withholding

Any property or service that an ER provides to an EE on an infrequent or sporadic base, if the value of such property or service is so minimal that accounting for it would be unreasonable or administratively impractical, is considered: A. Special accounting rule B. Working condition fringe C. De minimus fringe D. Non-cash compensation

C. De minimus fringe

EFTPS stands for: A. Electronic Funding Tax Payer Services B. Employment Federal Tax Payment System C. Electronic Federal Tax Payment System D. Electronic Funds Transfer Payment System

C. Electronic Federal Tax Payment System

Which of the following groups best defines the term nonexempt under FLSA? A. A lower-paid class of EEs B. Hourly-paid workers only C. EEs who must be paid overtime D. A special class of EEs as determined by the ER

C. Employees who must be paid overtime

What is NOT a staffing concern? A. Recruiting and selecting B. Writing job descriptions C. Evaluating next year's staff budget D. Delegating tasks

C. Evaluating next year's staff budget

A student is exempt from SS and Medi tax when holding what visa? A. J only B. Q only C. F, J or Q D. F only

C. F, J or Q

An EE is having difficulty instituting state-mandated changes in handling child support payments. Although working overtime, they struggle with the legal requirements, and the program is not operational. What style of manager is most likely to be effective in handling the EE's performance gap? A. High task, low relationship B. Low task, low relationship C. High task, high relationship D. Low task, high relationship

C. High task, high relationship

What kind of account is Accrued Salaries Payable? A. Asset B. Expense C. Liability D. Revenue

C. Liability

FLSA requires ERs to give EEs a day off on national holidays and to give EEs paid vacations if: A. EE's work on these holidays B. EE's work over 40 hours in the week C. Never D. Local banks are closed.

C. Never

Wages paid after death in the calendar year after the EE's death are taxable for: A. SS/Medi, FUTA, FITW B. SS/Medi, FUTA C. Not taxable for SS/Medi, FUTA, FITW D. SS/Medi only

C. Not taxable for Social Security/Medicare, FUTA, FITW

Once an EE has given authorization for EFT and the ER creates electronic pay transactions for deposit, where does the ER send them? A. ACH B. RDFI C. ODFI D. NACHA

C. ODFI

When must payments made by a business to non-corporate independent contractors for services rendered be reported to the IRS? A. Payments exceed $1,000 for the calendar year B. Payments exceed $600 in the last 12 months C. Payments exceed $600 for the calendar year D. Payments exceed $1,500 for the calendar year

C. Payments exceed $600 for the calendar year

Which account is generally listed first on a corporate balance sheet? A. Investments in subsidiary companies B. Land and improvements C. Prepaid expenses D. Buildings and other property

C. Prepaid expenses

All of the following duties would be included in the job description of an EE working in the payroll department EXCEPT: A. Data entry of payroll input B. Review source documents for proper authorization C. Reconciliation of payroll bank account D. Distribution of payroll related reports

C. Reconciliation of payroll bank account

Bob goes out on disability on May 1. His disability lasts until June 9. On May 29 Bob advises his ER that he will be taking a six month (unpaid) leave of absence. He is expected to return to work on Dec 4. He decides not to return to work and notifies his ER on Sept 5. On what date do COBRA rates become effective? A. May 29 B. June 9 C. September 5 D. December 4

C. September 5

When using vendor-supplied software to process payroll, what is considered a disadvantage? A. User group networking B. Ease of use C. Specific needs may not be met D. Initial installation costs

C. Specific needs may not be met

A semiweekly depositor's payday is on Friday the 10th. The following Wednesday, the company deposits 98% of its accumulated payroll tax liability. When is the shortfall due? A. With its quarterly return B. On or before its next deposit due date C. The first Wednesday or Friday, on or after the 15th of the following month D. On the next Wednesday or Friday after the first of the next month.

C. The first Wednesday or Friday, on or after the 15th of the following month

When an ER compensates an EE with restricted stock, when is the compensation taxable? A. When the EE sells the stock B. At the end of the next quarter C. When the risk of forfeiture ends D. At the end of the year

C. When the risk of forfeiture ends

BOX 12 CODE: Section 401(k) elective deferrals

D

The maximum hourly Tip Credit is: A. $6.55 B. $2.13 C. $3.72 D. $5.12

D. $5.12 ($7.25 - $2.13 = $5.12)

When ERs are determining their quarterly FUTA tax liability for the first three calendar quarter, what should they assume? A. 6.0% of their FUTA taxable wages will be due each quarter B. 5.4% of their FUTA taxable wages will be due each quarter C. No deposits should be made until 4th quarter when they file their annual 940 D. 0.6% of their FUTA taxable wages will be due each quarter

D. 0.6% of their FUTA taxable wages will be due each quarter

Under a cafeteria plan how can EEs obtain or purchase benefits? A. Flex dollars - ER paid B. Salary reduction - pretax dollars C. Payroll deductions - post tax dollars D. All of the above

D. All of the above

Under the principle of double-entry bookkeeping, what can a credit to an account signify? A. An increase in an asset account B. A decrease in a capital account C. A decrease in a liability account D. An increase in a liability account

D. An increase in a liability account

In which W-2 box must allocated tips be reported? A. Box 1,3, 5 B. Box 3, 5 C. Box 3, 5, 8 D. Box 8

D. Box 8

In which boxes on the W-2 would you report the adoption assistance? A. Boxes 3, 4, 5, 6 B. Boxes 1, 2, 3, 4, 5, 6, 12 - Code T C. Boxes 3, 4, 5, 6, 12 - Code A D. Boxes 3, 4, 5, 6, 12- Code T

D. Boxes 3, 4, 5, 6, 12- Code T

Health Care Flexible Spending Arrangements can only reimburse medical expenses during the: A. Prior quarter B. Prior month C. Current month D. Coverage period

D. Coverage period

What entries are required to record $45,000 in salaries earned between March 27 and March 30 but not paid until April 6? A. Debit salary payable, credit payroll checking B. Credit salary expense, debit salary payable C. Credit salary expense, debit assets D. Debit salary expense, credit salary payable

D. Debit salary expense, credit salary payable

An ER may exclude a business expense reimbursement from income when the EE's expenses meet which of the following requirements? A. Reimbursements are made with regular payroll. B. Expenses are substantiated and excess advances are returned timely. C. Expenses are business-related, substantiated, and excess advances are retained for future travel. D. Expenses are business-related, substantiated, and excess advances are returned timely.

D. Expenses are business-related, substantiated, and excess advances are returned timely.

In a computer system, what is the organization of related data called? A. Job B. Record C. Field D. File

D. File

What effect do revenues have on accounts? A. Increasing expenses B. Decreasing liabilities C. Decreasing owner's equity D. Increasing owner's equity

D. Increasing owner's equity

Which of following is one of the five steps of empowerment? A. Training B. Motivating C. Hiring the right employees D. Provide guidelines

D. Provide guidelines

Once GTL Insurance coverage becomes taxable, it is subject to: A. FITW and FUTA only B. SS/Medi and FUTA only C. FITW only D. SS/Medi only

D. Social Security/Medicare only

Moving expenses are reported on the W-2: A. Taxable portion in Box 1; Non-taxable portion in Box 12 B. Taxable portion in Boxes 1, 3, 5; Non-taxable portion in Box 12 C. Taxable portion in Box 1; Non-taxable portion in Box 12, coded "P" D. Taxable portion in Boxes 1, 3, 5; Non-taxable portion in Box 12, coded "P"

D. Taxable portion in Boxes 1, 3, 5; Non-taxable portion in Box 12, coded "P"

What phase of in-house system design follows the Development Phase? A. Evaluation Phase B. Conceptual Definition Phase C. Analysis Phase D. User Testing Phase

D. User Testing Phase

BOX 12 CODE: Section 403(b) elective deferrals

E

BOX 12 CODE: Designated Roth contributions under a governmental 457(b) plan

EE

BOX 12 CODE: Section 501(c) (18)(D) elective deferrals

H

BOX 12 CODE: Tax on excess golden parachute payments

K

BOX 12 CODE: Nontaxable part of employee business expense reimbursements

L

BOX 12 CODE: Uncollected Medicare tax on value of GTL insurance > $50,000

N

BOX 12 CODE: Excludable moving expense reimbursements paid to EE

P

BOX 12 CODE: Nontaxable Combat pay for military employers

Q

BOX 12 CODE: SIMPLE Retirement Account contributions

S

BOX 12 CODE: Adoption benefits

T

BOX 12 CODE: Nonstatutory stock options

V

BOX 12 CODE: Employer contributions to a Health Savings Account

W

BOX 12 CODE: Deferrals to 409A non-qualified Deferred Comp Plan

Y