The Payroll Source CPP Practice Exam Latest Update
Actual Exam Questions and 100% Verified Correct
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Which of the following features is LEAST likely to be considered when looking at the
security of a new payroll system?
a. regular data back-up and storage
b. protection against computer viruses
c. limited system access
d. system edits - ✔✔ANSW✔✔..d. system edits
An EE who works for more than one ER and has exceeded the social security wage
base may:
a. take a credit against FIT on Form 1040
b. demand that the ER refund the overage
c. apply the social security tax to next year's withholdings
d. apply the overage to benefits paid at age 65 - ✔✔ANSW✔✔..a. take a credit against
FIT on Form 1040
When determining the value of ER-provided parking, which of the following valuation
methods is allowed?
a. ER's cost
b. EE's cost
c. lower of EE's cost or fair market value
d. fair market value - ✔✔ANSW✔✔..d. fair market value
What is the purpose of the payroll accrual entry?
a. to recognize expenses in the period in which they were incurred
b. to reverse an entry made in error
c. to recognize expenses in the period in which they were paid
d. to reverse an entry from a previous period - ✔✔ANSW✔✔..a. to recognize expenses
in the period in which they were incurred
Which of the following steps is LEAST important during the parallel testing phase of a
new payroll system?
a. the testing of EE earnings and deductions accuracy
b. the verification of EEs transferred to the new system from the old system
c. the verification of tax withholding calculations for EEs
d. testing the functionality of a wage attachment process - ✔✔ANSW✔✔..d. testing the
functionality of a wage attachment process
, All of the following practices are acceptable to an external auditor EXCEPT:
a. the accounting dept reconciling the payroll checking account
b. the payroll supervisor verifying that deposits are made timely
c. storage of blank payroll checks in the payroll dept
d. the treasury dept being responsible for the signature of payroll checks -
✔✔ANSW✔✔..c. storage of blank payroll checks in the payroll dept
All of the following types of compensation are subject to social security tax EXCEPT:
a. tips under $100
b. deferred bonus
c. third-party sick pay up to $3,000
d. workers' compensation benefits - ✔✔ANSW✔✔..d. WC benefits
Which of the following outcomes is the PRIMARY advantage of developing an in-house
system?
a. Outsiders are not involved in a firm's daily operations.
b. Costs are reduced and can be distributed on an equitable basis.
c. The ER controls the entire computer system.
d. Time is saved by not having to explain business policies and practices. -
✔✔ANSW✔✔..c. The ER controls the entire computer system.
An EE covered by group health insurance at the time his employment terminates to
return to school is entitled to COBRA continuation rights for:
a. 12 months
b. 18 months
c. 24 months
d. 30 months - ✔✔ANSW✔✔..b. 18 months
How often are Form 940 taxable wages reported?
a. annually
b. semi-annually
c. quarterly
d. monthly - ✔✔ANSW✔✔..a. annual
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 - ✔✔ANSW✔✔..a. timely processing of the payroll
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 - ✔✔ANSW✔✔..a. identify root
causes and take actions to prevent similar recurrences
With regard to EEs' reported tips, the ER must:
a. withhold and pay only the EEs' portion of FICA taxes on tips
b. report tax on tips separately when making an employment tax deposit
Actual Exam Questions and 100% Verified Correct
Answers Guaranteed A+
Which of the following features is LEAST likely to be considered when looking at the
security of a new payroll system?
a. regular data back-up and storage
b. protection against computer viruses
c. limited system access
d. system edits - ✔✔ANSW✔✔..d. system edits
An EE who works for more than one ER and has exceeded the social security wage
base may:
a. take a credit against FIT on Form 1040
b. demand that the ER refund the overage
c. apply the social security tax to next year's withholdings
d. apply the overage to benefits paid at age 65 - ✔✔ANSW✔✔..a. take a credit against
FIT on Form 1040
When determining the value of ER-provided parking, which of the following valuation
methods is allowed?
a. ER's cost
b. EE's cost
c. lower of EE's cost or fair market value
d. fair market value - ✔✔ANSW✔✔..d. fair market value
What is the purpose of the payroll accrual entry?
a. to recognize expenses in the period in which they were incurred
b. to reverse an entry made in error
c. to recognize expenses in the period in which they were paid
d. to reverse an entry from a previous period - ✔✔ANSW✔✔..a. to recognize expenses
in the period in which they were incurred
Which of the following steps is LEAST important during the parallel testing phase of a
new payroll system?
a. the testing of EE earnings and deductions accuracy
b. the verification of EEs transferred to the new system from the old system
c. the verification of tax withholding calculations for EEs
d. testing the functionality of a wage attachment process - ✔✔ANSW✔✔..d. testing the
functionality of a wage attachment process
, All of the following practices are acceptable to an external auditor EXCEPT:
a. the accounting dept reconciling the payroll checking account
b. the payroll supervisor verifying that deposits are made timely
c. storage of blank payroll checks in the payroll dept
d. the treasury dept being responsible for the signature of payroll checks -
✔✔ANSW✔✔..c. storage of blank payroll checks in the payroll dept
All of the following types of compensation are subject to social security tax EXCEPT:
a. tips under $100
b. deferred bonus
c. third-party sick pay up to $3,000
d. workers' compensation benefits - ✔✔ANSW✔✔..d. WC benefits
Which of the following outcomes is the PRIMARY advantage of developing an in-house
system?
a. Outsiders are not involved in a firm's daily operations.
b. Costs are reduced and can be distributed on an equitable basis.
c. The ER controls the entire computer system.
d. Time is saved by not having to explain business policies and practices. -
✔✔ANSW✔✔..c. The ER controls the entire computer system.
An EE covered by group health insurance at the time his employment terminates to
return to school is entitled to COBRA continuation rights for:
a. 12 months
b. 18 months
c. 24 months
d. 30 months - ✔✔ANSW✔✔..b. 18 months
How often are Form 940 taxable wages reported?
a. annually
b. semi-annually
c. quarterly
d. monthly - ✔✔ANSW✔✔..a. annual
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 - ✔✔ANSW✔✔..a. timely processing of the payroll
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 - ✔✔ANSW✔✔..a. identify root
causes and take actions to prevent similar recurrences
With regard to EEs' reported tips, the ER must:
a. withhold and pay only the EEs' portion of FICA taxes on tips
b. report tax on tips separately when making an employment tax deposit
