Consider the following scenario and choose the correct answer from the options below.

Barney worked 46.75 hours last week. His rate of pay is $16.00 per hour. Barney’s job is regulated by the Fair Labor Standards Act (FLSA), and on his tax forms, Barney claims married status with two (2) children as dependents.

What is Barney’s gross pay for the week?

	a. $640.00
	b. $748.00
	c. $784.00
	d. $802.00

.

Consider the following scenario and choose the correct answer from the options below.

Roxanne worked 37.5 hours last week. Her rate of pay is $18.80 per hour. Roxanne’s job is regulated by the Fair Labor Standards Act (FLSA), and on her tax forms, Roxanne claims single status with five (5) children as dependents. In addition, Roxanne has $5.00 a week taken out of her paycheck to go toward her union dues.

What were Roxanne’s gross earnings for last week?

	a. $635.40
	b. $700.00
	c. $705.00
	d. $750.00

.

Consider the following scenario and choose the correct answer from the options below.

Sandra worked 48 hours last week. Her rate of pay is $13.75 per hour. Sandra’s job is regulated by the Fair Labor Standards Act (FLSA), and on her tax forms, Sandra claims single status with one (1) child as a dependent. Sandra also donates $7.00 per week to the United Way.

What are Sandra’s gross earnings for the week?

	a. $550.00
	b. $660.00
	c. $670.00
	d. $715.00

.

Tips received by employees:

	a. are not taxable.
	b. are taxable to the employer but not the employee.
	c. are taxable to the employee but not the employer.
	d. are taxable to both the employee and the employer.

.

What is a tip credit?

	a. A tip left on a customer’s credit card
	b. A tip made up by an employer when a customer does not leave one
	c. A policy that allows employers to pay less than minimum wage
	d. A policy that allows employees to apply tips toward fringe benefits

.

What is one of the functions of the Voluntary Classification Settlement Program (VCSP)?

	a. It allows an employer to reclassify workers as employees for future periods.
	b. It relieves an employer from the employee-vs.-contractor decision.
	c. It eliminates future Social Security and Medicare obligations for an employer.
	d. It allows an employer more freedom to decide whether a worker is an employee or an independent contractor.

.

When a business is regulated under the Fair Labor Standards Act (FLSA), under what conditions is the business required to pay overtime compensation to an employee?

	a. After the employee has worked 8 hours in a day
	b. After the employee has worked 40 hours in a week
	c. After the employee has worked on a legal holiday
	d. After the employee has worked 120 hours in a month

.

When deciding whether a worker is an employee or an independent contractor, all of the following factors should be considered EXCEPT:

	a. The worker’s physical location
	b. The worker’s financial relationship with the employer
	c. The worker’s job-duties relationship with the employer
	d. The worker’s behavior on the job

.

Which of the following examples of an employee would most likely be considered an independent contractor?

	a. An evening assembly-line maintenance worker
	b. A plumber who specializes in installing new sinks
	c. The US president’s personal assistant
	d. A part-time fork-lift driver

.

Which of the following types of employees are NOT protected by the Fair Labor Standards Act (FLSA)?

	a. Community college employees
	b. Full-time housekeepers
	c. Firework-stand attendants
	d. State driving-license examiners

.

For the purposes of Earned Income Credit (EIC), which of the following is considered earned income?

	a. Retirement income
	b. Social Security income
	c. Union strike benefits
	d. Unemployment benefits

.

What governing body enforces the Fair Labor Standards Act (FLSA)?

	a. The Wage and Hour Division of the US Department of Labor
	b. The US National Economic Council
	c. The Under Secretary of Political Affairs for the US State Department
	d. The US Small Business Administration

.

What is a consequence of withholding allowances?

	a. Withholding allowances increases the amount of taxes payable.
	b. Withholding allowances legally reduces the amount of taxes payable.
	c. Withholding allowances decreases the net amount of your paycheck.
	d. The withholding amount must be equal to the number of your dependents.

.

What is the main function of the 1947 Portal-to-Portal Act?

	a. It provides compensation for business travel expenses.
	b. It excludes compensation for business travel expenses.
	c. It provides compensation for travel home after work.
	d. It excludes compensation for travel to and from work.

.

What is the main function of the Family and Medical Leave Act of 1993?

	a. It enables employees to keep their jobs while taking leave for medical emergencies.
	b. It requires paid leave in cases of family medical emergencies.
	c. It pays for medical care in case of injury on the job.
	d. It prevents termination whenever workers are absent from work.

.

When completing a form W-4:

	a. the number of withholding allowances must equal the number of dependents on your tax return.
	b. the withholding allowances are related to, but not the same as, the number of dependents on your tax return.
	c. claiming greater than nine (9) allowances is prohibited.
	d. you should claim fewer withholding allowances than you do on your tax return.

.

For what amount of time must employers keep employee pay records, according to the Fair Labor Standards Act (FLSA)?

	a. A minimum of 3 months
	b. A minimum of 3 years
	c. A minimum of 6 months
	d. A minimum of 6 years

.

Transparency surrounding compensation is essential because:

	a. many employees develop their own perceptions of how pay is determined.
	b. employees are likely to quit when pay rates are not known.
	c. employees typically feel shortchanged when they see their pay stub.
	d. many employees are likely to sue if they aren’t paid what they want.

.

What are internal controls?

	a. Procedures intended to track the work of management
	b. Procedures designed to be punitive in nature
	c. Procedures intended to withhold and remit employee taxes and benefits
	d. Procedures designed to increase the efficiency of an organization

.

What is the major advantage of processing payroll by hand?

	a. It is an error-free method that enables a business to maintain control.
	b. It is a low-cost solution that enables small businesses to save money.
	c. It is a fast method that frees time for handling other aspects of the business.
	d. It allows for more creativity than does using employee payroll software.

.

What negative result/s can occur when a business fails to meet deadlines for depositing withheld income taxes, Social Security, Medicare contributions, and employer-matching amounts?

	a. Fines for the business manager, but not the business owners
	b. The organization being classified as “exempt”
	c. The business declaring bankruptcy
	d. Penalties and interest charges held against the business

.

When determining how much to pay your employees, the first step you should take is to:

	a. take a local survey to determine what competitors are paying.
	b. make sure that you're in compliance with wage and hour laws.
	c. ask a potential employee how much he or she is making at his or her current job.
	d. conduct an Internet search to determine industry wage standards.

.

All of the following are subject to withholding EXCEPT:

	a. Bonuses
	b. Commissions
	c. Vacations
	d. Scholarships

.

All of the following must be withheld from an employee’s paycheck EXCEPT:

	a. Federal Income Tax
	b. Federal Unemployment Tax
	c. Old Age, Survivors, and Disability Insurance
	d. Medicare Insurance

.

If an employee refuses to fill out a form W-4 when hired:

	a. the employee can be fined 25% of his or her salary.
	b. the employer cannot hire the person.
	c. the employer must withhold the employee’s income taxes at the highest rate.
	d. the employee can be jailed.

.

The amount of withholding for Federal Income Tax (FIT) that is reported on a W-4 is calculated using all of the following information EXCEPT:

	a. The employee’s birth date
	b. The number of allowances
	c. Additional amounts to voluntarily withhold
	d. Marital status

.

The Old-Age, Survivors, and Disability Insurance (OASDI) component of Social Security is:

	a. financed by Medicare.
	b. financed by the Social Security tax.
	c. withheld from employees only.
	d. paid by the employer only.

.

When an employer withholds income taxes from your pay:

	a. the amount withheld is paid to the IRS in your name.
	b. the amount is paid back to you in the form of Social Security payments.
	c. the tax liability of the employer is reduced.
	d. the employer keeps the money until the end of the year.

.

Consider the following scenario and choose the correct answer from the options below.

Sandra earned $1,200 last week. Sandra works and lives in Minnesota. She is single, claims one (1) allowance, and is paid weekly.

Below is a partial table from the 2013 Minnesota Withholding Tax Tables and a partial table from the 2013 federal withholding tables. Use these tables and the wage-bracket method to determine Sandra’s net pay for the week. What is Sandra’s net pay for the week?

	a. $120.07
	b. $191.95
	c. $765.25
	d. $845.29

.

Consider the following scenario and choose the correct answer from the options below.

Sandra earned $1,200 last week. Sandra works and lives in Minnesota. She is single, claims one (1) allowance, and is paid weekly.

Below is a partial table from the 2013 Minnesota Withholding Tax Tables. Use this table to determine the amount of Sandra’s state withholding for the week. Sandra’s state withholding for the week is:

	a. $68.00
	b. $69.00
	c. $196.45
	d. $198.70

.

Consider the following scenario and choose the correct answer from the options below.

Sandra earned $1,200 last week. Sandra works and lives in Minnesota. She is single, claims one (1) allowance, and is paid weekly.

The amounts Sandra’s employer will deduct from her paycheck for Social Security and Medicare, respectively, are:

	a. $7.44 and $1.74
	b. $74.40 and $17.40
	c. $9.18 and $2.15
	d. $91.80 and $21.46

.

Consider the following scenario and choose the correct answer from the options below.

Sandra earned $1,200 last week. Sandra works and lives in Minnesota. She is single, claims one (1) allowance, and is paid weekly.

Use the wage-bracket method and the section of the 2013 federal wage tables shown below to determine Sandra’s federal withholding for the week. Sandra’s federal withholding for the week is:

	a. $186.00
	b. $191.00
	c. $194.00
	d. $212.00

.

Which of the following is NOT a legal category for an employer to deduct from an employee’s paycheck?

	a. State tax withholdings
	b. Payment to a credit union
	c. The price of shares in a mutual fund
	d. Cash drawer shortages

.

Which of the following is NOT one of the three categories of withholding deductions?

	a. Federal, state, and local taxes
	b. Employee FICA withholdings
	c. Employee Federal Unemployment Taxes
	d. Voluntary deductions

.

Educational assistance includes all of the following EXCEPT:

	a. The cost of textbooks
	b. The cost of supplies
	c. The cost of tools
	d. The cost of tuition

.

Excluded fringe benefits:

	a. are not subject to Federal Income Tax withholding.
	b. may not be offered by employers.
	c. usually only apply to highly paid employees.
	d. include year-end bonuses.

.

What is the main purpose of the Consolidated Omnibus Reconciliation Act (COBRA)?

	a. It permits all employees to buy health insurance.
	b. It permits all employees to insure their spouses.
	c. It permits all employees to have health coverage for their entire family.
	d. It permits former employees to continue their health coverage for a limited period of time.

.

What type of benefits may a cafeteria plan NOT include?

	a. Accident and health benefits
	b. Health savings accounts
	c. Group-term life insurance
	d. Educational assistance

.

Which of the following employee benefits is considered to be de minimis?

	a. Employee housing
	b. A company picnic
	c. Education reimbursement
	d. Personal use of a company car

.

Which of the following employee benefits is required by federal law?

	a. Unpaid time off to vote
	b. Paid holidays
	c. Retirement plans
	d. Dental insurance

.

Deferred-compensation plans:

	a. are safe, tax-free retirement plans.
	b. protect employees from bankruptcy.
	c. must be made available to all employees.
	d. are only available to highly paid employees.

.

Flexible benefit plans:

	a. are a required employee benefit.
	b. can let employees buy healthcare-related items, such as eyeglasses, tax free.
	c. can let employees save flexible amounts for retirement.
	d. are reported as income on an employee’s W-4.

.

Generally, contributions made by an employer to a plan providing accident or health insurance to its employees and their spouses and dependents are:

	a. considered earned compensation and are subject to withholding.
	b. not subject to Federal Income Tax withholding.
	c. taxable for Federal Unemployment Tax (FUTA) purposes.
	d. considered income, and subject to State Unemployment Taxes (SUTA).

.

Social Security is:

	a. a tax paid by an employee only.
	b. a tax paid by an employer only.
	c. was originally a retirement program.
	d. was originally a health insurance program.

.

The Health Insurance Portability and Accountability Act (HIPAA):

	a. directly insures workers who change jobs.
	b. allows health insurance participation for workers who lose their jobs.
	c. requires employers to offer health plans.
	d. allows workers to continue health coverage at an employer’s expense.

.

Which of the following employee benefits is NOT required by law?

	a. Health insurance
	b. Workers’ compensation
	c. Unemployment insurance
	d. Social Security matching

.

An accrual:

	a. means that liabilities are increased as cash is paid out.
	b. means that cash increases as liabilities increase.
	c. means that an expense is recorded before cash is paid out.
	d. means that an expense is recorded only when cash is paid out.

.

Bonuses and commissions that are paid to employees:

	a. are usually calculated separately from the “regular” payroll.
	b. are usually considered part of a “regular” salary.
	c. must be kept, and calculated, separately from a “regular” salary because they are taxed differently.
	d. must be taxed for Federal Income Tax (FIT) withholding, but not FICA withholding.

.

Consider the following scenario and choose the correct answer from the options below.

Harry is covered by the Fair Labor Standards Act. Last week, he worked 47.5 hours at his regular rate of pay, $16.50 per hour.

Harry’s overtime pay and gross pay for the week, respectively, are:

	a. $182.62 and $783.75
	b. $182.62 and $842.62
	c. $118.60 and $1,175.62
	d. $118.60 and $1,350.31

.

The journal entry below:

	a. records the payment of net payroll to an employee.
	b. records the payment of gross payroll to an employee.
	c. decreases a liability and increases an asset.
	d. increases a liability and decreases an asset.

.

The journal entry below:

	a. records the payment of employee taxes.
	b. records the payment of employer taxes.
	c. records the accrual of employee taxes.
	d. records the accrual of employer taxes.

.

What does the matching principle state?

	a. Assets should be matched with liabilities.
	b. Expenses should be matched with revenues.
	c. Assets equal liabilities plus owner equity.
	d. Assets should equal owner equity.

.

A Form W-2:

	a. must be filled out by an employee upon hire.
	b. must be filled out by an employer upon hire.
	c. reports miscellaneous earnings by employees.
	d. reports employee earnings at the end of the year.

.

An accountable plan is a reimbursement or allowance arrangement that meets all of the following conditions EXCEPT:

	a. An employee pays for deductible expenses while performing as an employee
	b. An employee accounts for expenses within a reasonable time
	c. An employee returns any excess amounts above expenses to the employer
	d. An employee pays for employer expenses using cash or check

.

FTD deposit rules are:

	a. based on when salaries are paid, not earned.
	b. based on when salaries are earned, not paid.
	c. based on a business’s fiscal year.
	d. based on regular monthly payments.

.

FTD deposits:

	a. are made at the end of the calendar year.
	b. may be remitted with Form 941.
	c. must be filed electronically.
	d. may be remitted by cash (check) or electronic transfer.

.

In order to avoid penalties related to Electronic Federal Tax Payment System (EFTPS) payments, an employer must do all of the following EXCEPT:

	a. Submit a tax payment to EFTPS by 8 p.m. EST at least one calendar day before the tax due date
	b. Mail the organization’s check immediately after making the EFT deposit
	c. Record the EFT acknowledgement number
	d. Make sure there are enough funds to cover the tax payment

.

Who among the following types of employees must make Federal Tax Deposits (FTD)?

	a. Employees making over $2,500 per year
	b. Employers who pay more than $2,500 per year in wages
	c. Employees who owe more than $2,500 in taxes per quarter
	d. Employers who owe more than $2,500 in taxes per quarter

.

Betsy earned $57,000 last year. For Federal Unemployment Tax Act (FUTA) purposes, Betsy’s employer will pay a net FUTA amount of:

	a. $42.00
	b. $56.00
	c. $420.00
	d. $560.00

.

Forms that most employers must file for payroll tax purposes include all of the following EXCEPT:

	a. Form 940: Employer's Annual Federal Unemployment (FUTA) Tax Return
	b. Form 941: Employer's Quarterly Federal Tax Return
	c. Form 945: Annual Return of Withheld Federal Income Tax
	d. Form 987: Wire Transfer Authorization

.

In Kentucky, a new employer pays a 2.7% State Unemployment Tax (SUTA) up to $9,300. Karen earned $28,900 this year. For SUTA tax purposes, Karen’s employer will pay a total of:

	a. $25.11
	b. $251.10
	c. $78.03
	d. $780.30

.

The Federal Unemployment Tax Act (FUTA):

	a. pays unemployment benefits directly to unemployed persons.
	b. pays for state job service programs.
	c. is used solely for the payment of benefits to eligible unemployed workers.
	d. is used solely for federal workers who become unemployed.

.

What does the 98% Safe Harbor rule do?

	a. It allows employers to pay 98% of their taxes 98% of the time.
	b. It requires employers to deposit 98% of taxes due.
	c. It allows employers to deposit 98% of taxes due without a penalty.
	d. It requires employers to increase their liability by 98%.

.

What type of penalty will be imposed upon any person who fails to deposit any amount of tax in a government depository?

	a. A penalty equal to the amount due
	b. A penalty equal to the applicable percentage of the amount of the underpayment
	c. A penalty not to exceed $10,000
	d. A penalty not to exceed 7 years of imprisonment

.