Question 1

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

Accepted Answer

A) True 
 B)False  True

Question 2

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 3

If a firm pays its employees biweekly,how often does it disburse employee compensation?

Accepted Answer

A)  Twice per week
B)  Every week
C)  Every two weeks
D)  Every three weeks C

Question 4

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 5

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?

Accepted Answer

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.

Question 6

Josh,who is 21 years of age,is a new employee of XYZ Company.To establish his identity and employment authorization,he could present:

Accepted Answer

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.

Question 7

Which items must be contained in every hiring packet issued by an employer?

Accepted Answer

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

Question 8

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:

Accepted Answer

A)  For 10 years.
B)  For 15 years.
C)  For 20 years.
D)  Indefinitely.

Question 9

Outsourcing the payroll process:

Accepted Answer

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.

Question 10

Which of the following parties does not legally have access to a firm's payroll records?

Accepted Answer

A)  The IRS
B)  State revenue department employees
C)  All employees of the firm
D)  The Department of Homeland Security

Question 11

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?

Accepted Answer

A)  Independent contractor
B)  Exempt employee
C)  Nonexempt employee
D)  Statutory employee

Question 12

What types of records does IRS Regulation 26 CFR 1.6001 cover? (You may select more than one answer. )

Accepted Answer

A)  Manual pay records
B)  Computerized pay records
C)  Outsourced payroll records
D)  Independent contractor remittance

Question 13

Which of the following are important decisions that an employer must make regarding its payroll procedures? (You may select more than one answer. )

Accepted Answer

A)  How often to pay employees
B)  How to handle pay advances
C)  How many employees to hire
D)  Which employee benefits to offer

Question 14

An employer must have an employee complete Form W-4:

Accepted Answer

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.

Question 15

Payroll records that contain evidence of fraud or other illegal action must be ________.

Accepted Answer

A)  retained for two years
B)  destroyed immediately
C)  retained indefinitely
D)  released to law enforcement officials

Question 16

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 17

Which pay frequency has 12 pay periods?

Accepted Answer

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

Question 18

What forms are required when an employee is hired? (You may select more than one answer. )

Accepted Answer

A)  W-4
B)  I-9
C)  SS-4
D)  W-2

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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?

Accepted Answer

A)  W-2 and I-9
B)  W-4 and I-9
C)  W-4 and I-8
D)  W-3 and I-9

Exam 2: Payroll System Procedures