CPP Practice Exam 9
This is a practice quiz to help you prepare for the Certified Payroll Professional certification. The quiz is based on a bank of 25 multiple choice questions that reveal the correct answer before you move on to the next question. The questions and their associated answers are randomized every time you take the quiz to avoid pattern development. Questions requiring calculations that change from year to year have been omitted. Good luck as you pursue this goal. I hope this helps you prepare. Inspired by my lovely wife as she pursued this goal as Read morewell.
- 1.
Under NACHA rules, employers are advised to retain a copy of the employee's written authorization for direct deposit for at least:
- A.
4 years
- B.
2 years
- C.
3 years
- D.
1 year
Correct Answer
B. 2 yearsExplanation
Under NACHA rules, employers are advised to retain a copy of the employee's written authorization for direct deposit for at least 2 years. This is important because it ensures that the employer has a record of the employee's consent to have their wages deposited directly into their bank account. Retaining this authorization for 2 years allows the employer to refer back to it if any disputes or issues arise regarding the direct deposit arrangement.Rate this question:
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- 2.
Which of the following features is LEAST likely to be considered when looking at the security of a new payroll system?
- A.
A regular data back-up and storage
- B.
Protection against computer viruses
- C.
Limited system access
- D.
System edits
Correct Answer
D. System editsExplanation
System edits are the least likely feature to be considered when looking at the security of a new payroll system. While regular data back-up and storage, protection against computer viruses, and limited system access are all important security measures, system edits do not directly impact the security of the system. System edits refer to making changes or modifications to the payroll system, which may be necessary for functionality or customization purposes, but they do not specifically address security concerns.Rate this question:
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- 3.
Company deadlines for payroll data input documents are essential for:
- A.
Timely processing of the payroll
- B.
Accurate entry of data
- C.
Guaranteeing that all information is processed
- D.
Adequate auditing purposes
Correct Answer
A. Timely processing of the payrollExplanation
Company deadlines for payroll data input documents are essential for ensuring that the payroll is processed on time. These deadlines provide a clear timeline for when the data needs to be submitted, allowing the payroll department to allocate sufficient time for processing and avoid any delays in paying employees. By adhering to these deadlines, the company can ensure that employees receive their salaries on time, maintaining employee satisfaction and avoiding any potential legal issues.Rate this question:
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- 4.
An employee earns $9 per hour and an additional 10 cents per hour for hours worked after 7:00 p.m. If an employee works from 3:00 p.m. to 11:00 p.m., Monday through Friday, what is the employee's weekly gross pay under the Fair Labor Standards Act?
- A.
$360
- B.
$361
- C.
$362
- D.
$364
Correct Answer
C. $362Explanation
The employee works 8 hours per day from 3:00 p.m. to 11:00 p.m., which is a total of 40 hours per week. The employee earns $9 per hour for the first 7 hours and an additional 10 cents per hour for the remaining 33 hours worked after 7:00 p.m. Therefore, the employee earns $63 for the first 7 hours and $3.30 for the remaining hours. Adding these amounts together, the employee's weekly gross pay is $66.30. However, since the Fair Labor Standards Act requires pay to be rounded to the nearest nickel, the employee's weekly gross pay is rounded up to $66.35, which is equivalent to $362. Therefore, the correct answer is $362.Rate this question:
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- 5.
The BEST reason for tracking pay-related problem statistics is to enable Payroll to:
- A.
Identify root causes and take actions to prevent similar recurrences
- B.
Apologize to clients in a more professional manner
- C.
Direct problems to those who caused the problem
- D.
Justify more resources to handle more problems
Correct Answer
A. Identify root causes and take actions to prevent similar recurrencesExplanation
Tracking pay-related problem statistics allows Payroll to identify the root causes of these problems. By analyzing the data, Payroll can determine the common issues that lead to pay-related problems and take appropriate actions to prevent similar recurrences in the future. This helps in improving the efficiency and accuracy of the payroll process, reducing errors, and ensuring timely and accurate payment to employees. It also helps in identifying any systemic issues or patterns that may require process improvements or additional training for staff.Rate this question:
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- 6.
With regard to employee's reported tips, the employer must:
- A.
Withhold and pay only the employees' portion of social security and Medicare taxes on tips
- B.
Report taxes on tips separately when making an employment tax deposit
- C.
Report tips as wages on Form W-2 and pay the employer portions of social security and Medicare taxes
- D.
Report and pay the employer portion of social security and Medicare taxes on the portion of cash tips above the federal minimum wage
Correct Answer
C. Report tips as wages on Form W-2 and pay the employer portions of social security and Medicare taxesExplanation
The correct answer is to report tips as wages on Form W-2 and pay the employer portions of social security and Medicare taxes. This means that the employer is responsible for reporting the tips that employees receive as part of their wages on their Form W-2. Additionally, the employer must also pay the employer portions of social security and Medicare taxes on these reported tips. This ensures that both the employees and the employer are fulfilling their tax obligations related to reported tips.Rate this question:
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- 7.
Transactions are recorded in chronological order into books of original entry called:
- A.
Registers
- B.
Vouchers
- C.
Invoices
- D.
Journals
Correct Answer
D. JournalsExplanation
Transactions are recorded in chronological order into books of original entry called journals. Journals are used to record the daily transactions of a business before they are transferred to the general ledger. They serve as a chronological record of all financial transactions and provide a detailed account of each transaction. Journals help in maintaining an organized and systematic record-keeping process, making it easier to track and analyze financial data.Rate this question:
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- 8.
The KEY advantage of using an automated time and attendance system is that it:
- A.
Identifies phantom employees
- B.
Reduces errors
- C.
Interfaces with the payroll system
- D.
Frees supervisors from having to review hours
Correct Answer
B. Reduces errorsExplanation
An automated time and attendance system reduces errors by eliminating manual data entry and calculation. This reduces the chances of human error, such as mistakes in recording or calculating employee hours. By automating the process, the system ensures accurate and reliable time and attendance data, which is crucial for payroll calculations and other HR processes. This advantage improves efficiency and saves time for both employees and supervisors.Rate this question:
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- 9.
As part of the implementation of a new payroll system, all transactions from the most recent actual payroll are processed in the new system prior to using the system to run payrolls. This is an example of what type of testing?
- A.
Compliance
- B.
Back-up
- C.
Ongoing
- D.
Parallel
Correct Answer
D. ParallelExplanation
This is an example of parallel testing. Parallel testing involves running the new system alongside the old system, using the same data, to compare the results and ensure that the new system is functioning correctly. In this case, the transactions from the most recent actual payroll are processed in the new system to verify its accuracy and effectiveness before fully transitioning to it for future payrolls.Rate this question:
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- 10.
To exhibit good customer service skills, payroll staff must understand and be able to explain:
- A.
Payroll forms
- B.
Benefits enrollment techniques
- C.
System design decisions
- D.
Strategic departmental direction
Correct Answer
A. Payroll formsExplanation
Payroll forms are an important aspect of good customer service skills for payroll staff because they need to understand and be able to explain these forms to employees. Payroll forms are necessary for various processes such as onboarding, tax withholding, and benefits enrollment. By being knowledgeable about these forms, payroll staff can effectively assist employees in filling them out correctly and provide accurate information regarding payroll procedures. This ensures smooth and efficient payroll processing, contributing to overall customer satisfaction.Rate this question:
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- 11.
Under FLSA , what is the compensation due an employee whose rate of pay is $8 per hour and who is paid for 52 hours during a one-week period, including 8 hours of sick pay?
- A.
$416
- B.
$432
- C.
$448
- D.
$464
Correct Answer
B. $432Explanation
Determine the regular hours worked and the sick hours:
Total hours paid: 52 hours
Sick pay hours: 8 hours
Actual hours worked: 52 - 8 = 44 hours
Calculate the regular pay:
Regular hours worked: 40 hours
Regular pay: 40 hours * $8/hour = $320
Calculate the overtime pay:
Overtime hours: 44 hours (actual hours worked) - 40 hours (regular hours) = 4 hours
Overtime pay rate: $8/hour * 1.5 = $12/hour
Overtime pay: 4 hours * $12/hour = $48
Add the sick pay:
Sick pay: 8 hours * $8/hour = $64
Total compensation:
Total pay = Regular pay + Overtime pay + Sick pay
Total pay = $320 (regular) + $48 (overtime) + $64 (sick) = $432Rate this question:
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- 12.
All of the following data elements are required to be maintained in the employee masterfile EXCEPT:
- A.
Social security number
- B.
Birth date
- C.
Marital status
- D.
Occupation
Correct Answer
C. Marital statusExplanation
Marital status is not required to be maintained in the employee masterfile. While social security number, birth date, and occupation are important data elements for employee records, marital status is not typically necessary for maintaining employee information.Rate this question:
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- 13.
Upward communication involves:
- A.
Dissemination of management decision to the staff
- B.
Interactions between you and your manager
- C.
Passing information to management
- D.
Conducting quality circle meetings
Correct Answer
C. Passing information to managementExplanation
Upward communication involves passing information to management. This means that employees or subordinates provide feedback, updates, or reports to their managers or superiors. It is a way for employees to share important information, such as progress updates, challenges, or suggestions, with management. This type of communication is essential for keeping management informed and ensuring that they have the necessary information to make informed decisions.Rate this question:
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- 14.
The fact that transactions affect two separate accounts of a business is called:
- A.
Compound-entry accounting
- B.
Double-entry accounting
- C.
Accrual accounting
- D.
T-accounting
Correct Answer
B. Double-entry accountingExplanation
Double-entry accounting is the correct answer because it refers to the practice of recording a transaction in two separate accounts - one account is debited and the other is credited. This system ensures that the accounting equation (assets = liabilities + equity) remains balanced. Each transaction has an equal and opposite effect on both sides of the equation, which helps maintain accuracy and transparency in financial records.Rate this question:
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- 15.
A company pays all executives semimonthly. The FLSA requires all other employees to be paid on:
- A.
A weekly cycle
- B.
A biweekly cycle
- C.
A semimonthly cycle
- D.
Any established cycle
Correct Answer
D. Any established cycleExplanation
The FLSA (Fair Labor Standards Act) does not specify a specific pay cycle for non-executive employees. Instead, it allows employers to establish their own pay cycles as long as they meet certain requirements, such as paying employees at least once a month. Therefore, the correct answer is "any established cycle" because the FLSA does not mandate a specific pay cycle for non-executive employees.Rate this question:
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- 16.
Calculate the employee's gross pay under the FLSA based on the following data: Rate of pay per hour: $8.00 Production bonus: $25.00 Shift differential per hour: $$0.25 Total shift hours in workweek: 44
- A.
$380.64
- B.
$377.00
- C.
$404.50
- D.
$405.64
Correct Answer
C. $404.50Explanation
Regular Pay Calculation:
Regular Hours: The FLSA defines regular hours as the first 40 hours in a workweek.
Overtime Hours: Hours worked over 40 in a workweek are considered overtime.
Given that the total hours worked are 44, the breakdown is:
Regular Hours: 40 hours
Overtime Hours: 4 hours
Effective Hourly Rate (including shift differential):
Regular Rate + Shift Differential = $8.00 + $0.25 = $8.25 per hour
Regular Pay:
Regular Pay = Regular Rate × Regular Hours = $8.25 × 40 = $330.00
Overtime Pay Calculation:
Overtime is paid at 1.5 times the regular hourly rate (including shift differential).
Overtime Rate = $8.25 × 1.5 = $12.375 per hour
Overtime Pay = Overtime Rate × Overtime Hours = $12.375 × 4 = $49.50
Total Hourly Pay (without bonuses):
Total Hourly Pay = Regular Pay + Overtime Pay = $330.00 + $49.50 = $379.50
Total Gross Pay (including production bonus):
Total Gross Pay = Total Hourly Pay + Production Bonus = $379.50 + $25.00 = $404.50Rate this question:
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- 17.
Which of the following groups BEST defines the term nonexempt under the FLSA?
- A.
A lowered-paid class of employees
- B.
Hourly-paid workers only
- C.
Employees who must be paid overtime
- D.
A special class of employees as determined by the employer
Correct Answer
C. Employees who must be paid overtimeExplanation
The term "nonexempt" under the FLSA refers to employees who are not exempt from the overtime pay requirements. This means that these employees must be paid overtime for any hours worked beyond the standard 40 hours per week. Therefore, the correct answer is "employees who must be paid overtime."Rate this question:
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- 18.
For how many years must the employer's copy of Form 940 be retained?
- A.
2
- B.
3
- C.
4
- D.
5
Correct Answer
C. 4Explanation
The employer's copy of Form 940 must be retained for 4 years. This is important for record-keeping purposes and to ensure compliance with tax regulations. Retaining the form allows the employer to have documentation of their tax obligations and can be useful in case of an audit or other inquiries from the tax authorities.Rate this question:
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- 19.
Copies of the production files and most recent payroll transactions are sent nightly to the parent company in a remote location. this practice is part of what type of plan?
- A.
Security
- B.
Control
- C.
Disaster recovery
- D.
Maintenance
Correct Answer
C. Disaster recoveryExplanation
The practice of sending copies of production files and payroll transactions to a remote location on a nightly basis is a part of a disaster recovery plan. This plan ensures that in the event of a disaster or system failure, the parent company will have access to the most recent data and can resume operations quickly.Rate this question:
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- 20.
Employees who are not eligible for direct deposit and receive paychecks sent through the mail are constructively paid:
- A.
On the check date
- B.
When the checks were postmarked
- C.
When the checks are delivered
- D.
When the checks are cashed
Correct Answer
C. When the checks are deliveredExplanation
Employees who are not eligible for direct deposit and receive paychecks sent through the mail are constructively paid when the checks are delivered. This means that the payment is considered to have been made on the date the checks are received by the employees, regardless of when they are actually cashed. This ensures that the employees have access to their funds as soon as the checks are delivered to them.Rate this question:
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- 21.
Which of the following factors provides system security?
- A.
Access level authorizations
- B.
Shared passwords
- C.
Conducting "physical payouts"
- D.
Segregation of duties
Correct Answer
A. Access level authorizationsExplanation
Access level authorizations provide system security by controlling and limiting the level of access that individuals have to the system. This ensures that only authorized personnel can access sensitive information or perform certain actions, reducing the risk of unauthorized access or misuse of the system. By assigning different access levels based on job roles and responsibilities, organizations can enforce security measures and protect their systems from potential threats or breaches.Rate this question:
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- 22.
Under the FLSA, how long are employers required to keep records relating to wages, hours, and conditions of employment?
- A.
3 years
- B.
4 years or until the file is no longer active
- C.
7 years
- D.
Permanently
Correct Answer
A. 3 yearsExplanation
Under the Fair Labor Standards Act (FLSA), employers are required to keep records relating to wages, hours, and conditions of employment for a period of 3 years. This includes records such as payroll records, timecards, and work schedules. These records must be readily available for inspection by the Department of Labor. Keeping these records for 3 years ensures that employers can provide accurate information and evidence in case of any disputes or investigations regarding wage and hour compliance.Rate this question:
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- 23.
What is the payroll department manager responsible for in a company with strong internal controls?
- A.
Assuring segregation of duties in the department
- B.
Development company policy
- C.
Initiating payroll transactions
- D.
Writing the internal audit transaction test plan
Correct Answer
A. Assuring segregation of duties in the departmentExplanation
The payroll department manager is responsible for assuring segregation of duties in the department. This means ensuring that different employees are assigned different tasks and responsibilities related to payroll processing, such as collecting time sheets, calculating wages, and distributing paychecks. By separating these duties, the manager reduces the risk of fraud or errors, as no single employee has complete control over the entire payroll process. Strong internal controls require a clear segregation of duties to promote transparency, accountability, and accuracy in payroll operations.Rate this question:
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- 24.
The process of balancing multiple time sheets within a specified pay period utilizes a procedure know as:
- A.
Batch totaling
- B.
Exception reporting
- C.
System documentation
- D.
Reconciliation
Correct Answer
A. Batch totalingExplanation
The process of balancing multiple time sheets within a specified pay period utilizes a procedure known as batch totaling. This involves adding up the total hours worked by each employee and calculating their respective wages for the pay period. By performing batch totaling, employers can ensure that the correct amount is paid to each employee based on their recorded hours. This process helps to streamline payroll calculations and ensure accuracy in wage payments.Rate this question:
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- 25.
In 2010, an individual worked for three employers during the calendar year, earning $38,000, $39,000, and $35,000 respectively. What is the total amount of social security and Medicare taxes that should be withheld from the employee's wages by the three employers?
- A.
$6,944.00
- B.
$8,170.20
- C.
$8,245.60
- D.
$8,586.00
Correct Answer
C. $8,245.60Explanation
To calculate the total amount of Social Security and Medicare taxes that should be withheld from the employee's wages, we need to consider the following rates and limits for the year 2010:
Social Security tax rate: 6.2% on wages up to the Social Security wage base limit.
Medicare tax rate: 1.45% on all wages (no wage base limit).
For 2010, the Social Security wage base limit was $106,800. This means Social Security tax is only calculated on earnings up to $106,800.
Given the individual's earnings from three employers:
Employer 1: $38,000
Employer 2: $39,000
Employer 3: $35,000
Total earnings: $38,000 + $39,000 + $35,000 = $112,000
Since the total earnings exceed the Social Security wage base limit, Social Security tax will be calculated on the first $106,800 of the earnings.
Social Security Tax Calculation:
Social Security tax on $106,800 = $106,800 * 6.2% = $6,621.60
Medicare Tax Calculation:
Medicare tax on $112,000 = $112,000 * 1.45% = $1,624.00
Total Social Security and Medicare Taxes:
Total taxes = Social Security tax + Medicare tax
Total taxes = $6,621.60 + $1,624.00 = $8,245.60
Therefore, the total amount of Social Security and Medicare taxes that should be withheld from the employee's wages by the three employers is $8,245.60.Rate this question:
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Jul 10, 2024Quiz Edited by
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Sep 06, 2011Quiz Created by
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