Deck 2: Payroll System Procedures

Question 1

What forms are required when an employee is hired (Select all that apply)?

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

Answer 1

A

Question 2

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

Answer 2

False

Question 3

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

Answer 3

False

Question 4

Which pay frequency has 26 pay periods per year?

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

Question 5

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

Question 6

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

Question 7

Newly hired employees must be reported to governmental officials within 20 days of starting work for an employer.

Question 8

Semimonthly payroll involves a pay cycle in which pay disbursements occur every two weeks.

Question 9

Which of the following are important decisions that an employer must make regarding its payroll procedures (Select all that apply)?

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 10

Which pay frequency has 12 pay periods?

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

Question 11

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

Question 12

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

Question 13

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

Question 14

Which pay frequency has 24 pay periods annually?

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

Question 15

Which of the following is/are purpose(s)of new hire reporting laws (Select all that apply)?

A) To ensure payment of court-ordered obligations like garnishments and child support.
B) To keep track of workers throughout their careers.
C) To ensure that the employee may legally work in the United States.
D) To keep track of workers and professionals who are subject to licensing regulations.

Question 16

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

Question 17

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.

Question 18

U.S.workers in foreign subsidiaries are exempt from all income taxes.

Question 19

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

Question 20

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

Question 21

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

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 22

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

Question 23

Which of the following factors assist employers in determining employee pay rates (Select all that apply)?

A) Employee skill
B) Company location
C) Employee age
D) Industry benchmarks

Question 24

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

Question 25

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

Question 26

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

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

Question 27

A payroll review process increases in complexity when:

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 28

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

Question 29

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.

Question 30

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.

Question 31

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

Question 32

Outsourcing the payroll process:

A) Relieves the company of the task completion and the review process.
B) Relieves the company of certain 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 33

Which of the following is a potential consequence of incorrect calculation of employee time for payroll purposes (Select all that apply)?

A) Federal penalties for not remitting all taxes due
B) Erosion of available cash because of overpayments to employees
C) Increased stakeholder approval due to employee overpayments
D) An increase in legal proceedings initiated by employees

Question 34

Allen is an employee of the foreign subsidiary of a United States based company who lives and work in the United Kingdom.According to FATCA,how much of his wages may Allen exclude from United States' taxes,according to 2016 guidelines?

A) $46,500
B) $79,850
C) $101,300

Question 35

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.

Question 36

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

Question 37

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

Question 38

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

Question 39

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

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

Question 40

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.

Question 41

Which of the following is true about document destruction requirements (Select all that apply)?

A) Federal legislation requires documents to be retained for two years after the employee's termination.
B) Personnel 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 42

Well-designed internal controls promote (Select all that apply):

A) Legal compliance and file integrity.
B) Opportunities for defalcation.
C) Protection against embezzlement.
D) Audit trail support.

Question 43

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.

Question 44

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.

Question 45

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 and all backups.
D) He should send an interoffice request to have someone in the information technology department remove the record from the server.

Question 46

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

Question 47

What types of records does IRS Regulation 26 CFR 1.6001 cover (Select all that apply)?

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

Question 48

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

Question 49

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

Question 50

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.

Question 51

Computerized payroll records are considered a(n):

A) Open system.
B) Open access.
C) Closed system.
D) Closed access.

Question 52

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 commission 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.

Question 53

Employee file maintenance is the responsibility of the:

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

Question 54

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.

Question 55

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.

Question 56

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.

Question 57

A firm needs to destroy paper payroll records after the end of the retention period.Which of the following is an option for destruction purposes (Select all that apply)?

A) Shredding
B) Discarding
C) Pulping
D) Burning

Question 58

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.

Question 59

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.

Question 60

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

Question 61

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

Question 62

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.

Question 63

Individuals classified as _________________________________ are processed as vendors of a firm.

A) Exempt employees.
B) Nonexempt employees.
C) Government contract employees.
D) Independent contractors.

Question 64

Upon termination from a firm,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.

Question 65

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.

Question 66

_______________________ 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

Question 67

_______________ 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.

Question 68

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.

Question 69

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

Question 70

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