FPC EXAM FUNDAMENTAL PAYROLL
QUESTIONS AND ANSWER S
Question : 668-W
CORRECT ANSWER: Notice of Levy on Wages, Salary,
and Other Income
Question : 1096
CORRECT ANSWER: Annual Summary and Transmittal
of U.S. Information Returns
Question : Under the FLSA how old must a minor be to be
employed?
CORRECT ANSWER: 14
Question : What is the FUTA tax rate?
CORRECT ANSWER: 6.0%
Question : On form 941, the employer reports
CORRECT ANSWER: Social Security Wages
Question : What is the formula for calculating an employees
net pay?
CORRECT ANSWER: Gross pay-deductions for taxes-
other deductions
Question : Which plan discriminates in favor of highly
compensated employees?
CORRECT ANSWER: Nonqualified deferred
compensation plans
Question : What is the federal minimum wage per hour on
January 1, 2018?
CORRECT ANSWER: $7.25
Question : What law determines time limits with which
employees must be paid after wages are earned?
CORRECT ANSWER: State Laws
Question : Cafeteria plans are authorized by what internal
revenue code section?
CORRECT ANSWER: 125
Question : The direct deposit data sent to the bank after
payroll processing is an example of
CORRECT ANSWER: Interface
Question : What taxes, if any, must be withheld from
payments to an independent contractor who provided a tin?
CORRECT ANSWER: No taxes are withheld
Question : An external audit:
CORRECT ANSWER: Allows an objective assessment of
the financial statements.
Question : Employees' privacy rights are governed by all of
the following except:
CORRECT ANSWER: Local Legislation
Question : Under the FLSA, what basis is used to determine
whether a non-exempt employee is to be paid overtime?
CORRECT ANSWER: Hours worked in a work week
Question : Overtime payments are included in the calculation
of what tax, if any?
CORRECT ANSWER: They are included in all tax
calculations
Question : What is the 2018 wage base for social security
tax?
CORRECT ANSWE R: $128,400.00
Question : If an employee does not have federal tax withheld
and has not claimed exempt, what must the employer do?
CORRECT ANSWER: Provide the employee with the
EITC notice
Question : A computerized payroll system can help a payroll
dept. accomplish all of the following tasks except:
CORRECT ANSWER: Recognize changes in laws and
regulations
Question : An employee's profit sharing bonus is payable in
the year following his death. How should the bonus be taxed and reported?
CORRECT ANSWER: Withhold no taxes and report the
bonus on for 1099-misc.
Question : In what ways can a computerized system increase
the accuracy of employees paychecks?
CORRECT ANSWER: By reducing human error
Question : What federal taxes must an employer withhold
from an employees reported tips?
CORRECT ANSWER: Federal income, social security and
medicare tax
Question : The main purpose of batch controls is to
CORRECT ANSWER: Validate data entry accuracy
Question : Which of the following types of compensation is
taxable?