Payroll Accounting
Chapter Exam Questions
Course Introduction
Payroll Accounting introduces students to the principles and practices involved in calculating employee compensation, employer payroll taxes, and maintaining accurate payroll records. The course covers wage and salary calculations, mandatory and voluntary deductions, payroll tax laws, and the preparation of payroll reports required by federal, state, and local agencies. Students will learn to apply payroll systems, manage compliance with government regulations, and handle accounting transactions related to payroll. Practical exercises and case studies help develop skills in using accounting software for payroll processing, fostering an understanding of the critical role payroll plays in business operations and financial management.
Recommended Textbook
Payroll Accounting 2019 5th Edition by Jeanette Landin
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7 Chapters
526 Verified Questions
526 Flashcards
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Chapter 1: Payroll Practices and System Fundamentals
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Sample Questions
Q1) The ________ instituted significant changes to payroll taxes,especially adjustments for inflation and employee income tax computation.
A)Social Security Act
B)Walsh-Healey Public Contracts Act
C)Tax Cuts and Jobs Act
D)Affordable Care Act
Answer: C
Q2) The purpose of payroll legislation is to:
A)Increase the complexity involved in compensating employees.
B)Protect the rights of employees by legislating workplace equity.
C)Generate increased tax revenue for governmental entities.
D)Promote governmental involvement in business activities.
Answer: B
Q3) The main purpose of the Federal Insurance Contributions Act (FICA)was to:
A)Provide health insurance for all employees.
B)Mandate worker's compensation insurance for employers.
C)Provide life insurance for all employees.
D)Provide benefits for workers who were unable to work because of age,disability,or death.
Answer: D
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Chapter 2: Payroll System Procedures
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Sample Questions
Q1) Employee file maintenance is the responsibility of the:
A)Employee.
B)Employer.
C)Payroll vendor.
D)State government.
Answer: B
Q2) 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 these
Answer: A
Q3) 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.
Answer: A
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Chapter 3: Gross Pay Computation
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Sample Questions
Q1) Piece-rate pay is used for employees who participate materially in the sale of manufacturing components.
A)True
B)False
Answer: False
Q2) Maya is compensated using a salary-plus-commission basis for her work.Her annual base salary is $32,000.During a semimonthly pay period she made $18,500 in sales,for which she receives a 2% commission.Her gross pay for the semimonthly period is ________.(Do not round intermediate calculations.Round your answer to 2 decimal places. )
A)$1,333.33
B)$1,523.55
C)$1,693.54
D)$1,703.33
Answer: D
Q3) The payroll register should be retained indefinitely,unlike most other payroll documentation.
A)True
B)False
Answer: False
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Chapter 4: Fringe Benefits and Voluntary Deductions
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Sample Questions
Q1) Hattie Bowers is a government employee who is provided a car for commuting and other work-related purposes only.In the last calendar year,her commute is 8 miles each way and she worked 220 days.What is the amount of the company-car fringe benefit that will appear on her W-2? (Do not round intermediate calculations. )
A)$2,140.00
B)$2,640.00
C)$4,680.00
D)$5,280.00
Q2) According to Consumer Credit Protection Act,what is a limit on the amount of a garnishment for consumer credit?
A)It must be less than 50% of an employee's gross earnings.
B)It may be 75% of the employee's disposable income.
C)It must be a minimum of 10% of an employee's annual salary.
D)It cannot exceed 25% of an employee's disposable income.
Q3) Employers benefit by offering POPs because they reduce ________.
A)income tax liability
B)cash paid to employees
C)FICA tax liability
D)employee turnover
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Page 6
Chapter 5: Employee Net Pay and Pay Methods
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Sample Questions
Q1) The use of paycards as a means of transmitting employee pay began in the 1990s with over-the-road drivers out of a need to transmit funds reliably on payday.
A)True
B)False
Q2) Which of the following payment methods is growing in popularity among employees?
A)Cash
B)Check
C)Direct Deposit
D)Paycard
Q3) State and Local Income Tax rates ________.
A)exist at the same level in every state
B)differ among states and localities
C)are mandated by Federal law
D)are paid by the employer to the Federal government
Q4) Which body issued Regulation E to protect consumers from loss of deposited funds?
A)Department of Homeland Security
B)Internal Revenue Service
C)American Banking Association
D)Federal Deposit Insurance Corporation
Page 7
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Chapter 6: Employer Payroll Taxes and Labor Planning
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Sample Questions
Q1) The IRS uses the ________ to determine how often a company must deposit payroll taxes.
A)Previous year's payroll tax deposits
B)Firm's income tax filings
C)Lookback period
D)Financial statements
Q2) Employee expenses like benefits and other non-wage compensation may amount to at least another ________ of each employee's annual pay.
A)40%
B)60%
C)70%
D)50%
Q3) Electronic tax deposits are usually processed through the:
A)AFTPS.
B)ESTPF.
C)EPS.
D)EFTPS.
Q4) FUTA tax rates vary from state to state.
A)True
B)False
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Chapter 7: The Payroll Register, employees Earnings
Records, and Accounting System Entries
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Sample Questions
Q1) In general,how are the expenses associated with the payroll accountant's labor allocated in a firm?
A)They are billed directly to a customer.
B)They are allocated to one department.
C)They are reported as part of the firm's overhead.
D)They are billed directly to each department manager.
Q2) How do accrued,but not paid,wages appear on the balance sheet?
A)As expenses
B)As assets
C)As equity
D)As liabilities
Q3) Which columns might an employer include to facilitate employer-share payroll tax
General Journal entries? (You may select more than one answer. )
A)Worker's Compensation
B)FUTA
C)SUTA
D)Employer's Federal Income tax
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Page 9