Question 1

Why is it important for an employer to classify a worker as either an employee or an independent contractor?

Accepted Answer

A)   For tax reporting purposes
B)   For child support obligations purposes
C)   For government tracking purposes
D)   For reimbursement purposes A

Question 2

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

Accepted Answer

A) True 
 B)False  True

Question 3

Which of the following is a necessary element in an accounting system? (Select all that apply.)

Accepted Answer

A)   Internal review
B)   Audit control
C)   Internal control
D)   Audit review A, C

Question 4

Which of the following is true about document retention requirements per the IRS statute of limitations?

Accepted Answer

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.

Question 5

The ________ mandated that new hires must be reported within ________ days to state authorities.

Accepted Answer

A)   Fair Labor Standards Act; 30
B)   Immigration Reform and Control Act; 20
C)   Civil Rights Act; 25
D)   Davis-Bacon Act; 28

Question 6

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?

Accepted Answer

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.

Question 7

Employee file maintenance is the responsibility of the:

Accepted Answer

A)   Employee.
B)   Employer.
C)   Payroll vendor.
D)   State government.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Multistate employers must do which of the following for new hire reporting? (Select all that apply.)

Accepted Answer

A)   File a report with the state offices for the employee's state of residence
B)   File a report with the IRS since they have employees in multiple states
C)   Designate which state will receive their new hire reporting
D)   File a new-hire report with both the state that contains the firm's headquarters and the state that is the employee's primary residence

Question 10

Which of the following is subject to overtime in the process of hourly computations, according to FLSA?

Accepted Answer

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

Question 11

For payroll documentation purposes, when an employee needs time away from work:

Accepted Answer

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.

Question 12

Which pay frequency has 12 pay periods?

Accepted Answer

A)   Daily
B)   Weekly
C)   Monthly
D)   Semimonthly

Question 13

________ pay is based on sales revenue, while ________ pay is based on manufacturing.

Accepted Answer

A)   Exempt; nonexempt
B)   Commission; overtime
C)   Piece-rate; commission
D)   Commission; piece-rate

Question 14

A payroll review process increases in complexity when:

Accepted Answer

A)   The company is 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.

Question 15

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.

Accepted Answer

A)   Piece-rate
B)   Commission
C)   Pay-for-performance
D)   Nonexempt

Question 16

Which pay frequency has 24 pay periods annually?

Accepted Answer

A)   Weekly
B)   Biweekly
C)   Semimonthly
D)   Semi-weekly

Question 17

Which of the following is a purpose of new hire reporting? (Select all that apply.)

Accepted Answer

A)   Immigration agency tracking
B)   COBRA benefits administration
C)   Communications of ethics violations for clerical workers
D)   Child support obligations tracking

Question 18

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?

Accepted Answer

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.

Question 19

What is the difference in pay practices between salaried exempt and salaried nonexempt workers?

Accepted Answer

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.

Question 20

Natalie is involuntarily terminated by a company in Alabama. According to state regulations, when must she receive her final pay?

Accepted Answer

A)   On the next business day
B)   No standardized state guidelines exist
C)   Within seven business days
D)   At the next schedule payday

Exam 2: Payroll System Procedures