ADP Payroll Accounting and Reconciliation 2 — Questions and Answers
Question 1: What is the difference between a payroll void and a payroll reversal in ADP?
- A void cancels a check before it is processed by the bank; a reversal recalls a direct deposit after it has been submitted to the ACH network (Correct answer)
- A void is used for direct deposits; a reversal is used for paper checks
- Both terms refer to the same process in ADP
- A void requires IRS notification; a reversal does not
Correct answer: A void cancels a check before it is processed by the bank; a reversal recalls a direct deposit after it has been submitted to the ACH network
Voiding a check cancels it before bank processing, while an ACH reversal is initiated after direct deposit funds have been transmitted, recalling the erroneous payment through the banking network.
Question 2: Which ADP report best supports the preparation of workers' compensation premium audits?
- Payroll Detail by Workers' Compensation Code Report (Correct answer)
- Employee Earnings Summary
- Benefits Deduction Summary Report
- Tax Liability Report
Correct answer: Payroll Detail by Workers' Compensation Code Report
Workers' compensation audits require detailed payroll data sorted by classification codes; ADP's Payroll Detail by Workers' Compensation Code Report provides this breakdown.
Question 3: If the bank account reconciliation shows a discrepancy between the net payroll amount and the amount transferred, what is the most likely cause?
- An uncashed paycheck, a reversed direct deposit, or a bank error not yet reflected in ADP (Correct answer)
- An incorrect tax rate applied during the payroll run
- A benefit deduction that was double-posted
- An employee's W-4 was not updated in time
Correct answer: An uncashed paycheck, a reversed direct deposit, or a bank error not yet reflected in ADP
Bank reconciliation discrepancies in payroll often result from outstanding checks, ACH reversals, or timing differences between ADP's transfer records and the bank's posting.
Question 4: What is the significance of the ADP 'off-cycle' payroll run and when is it typically used?
- An off-cycle run processes payments outside the normal pay schedule, typically for corrections, final paychecks, or bonus payments (Correct answer)
- An off-cycle run is used to process automatic pay increases only
- An off-cycle run is a test payroll that does not generate real payments
- An off-cycle run is required for all employees on commission
Correct answer: An off-cycle run processes payments outside the normal pay schedule, typically for corrections, final paychecks, or bonus payments
Off-cycle payrolls in ADP allow employers to issue payments outside the regular schedule for corrections, termination pay, or special bonuses without waiting for the next regular pay period.
Question 5: What is a 'suspense account' in the context of payroll accounting and why is it a problem?
- A temporary holding account for transactions that cannot be immediately classified; unresolved suspense balances distort financial statements (Correct answer)
- An account used to hold payroll reserves for future periods
- An account for pre-tax benefit contributions pending carrier remittance
- A separate account used for contractor payments
Correct answer: A temporary holding account for transactions that cannot be immediately classified; unresolved suspense balances distort financial statements
Suspense accounts hold unclassified payroll transactions temporarily; leaving balances in suspense distorts financial reporting and must be resolved promptly.
Question 6: In ADP, what does the 'labor distribution' feature do for payroll accounting?
- It allocates payroll costs across multiple departments, cost centers, or projects based on predefined percentage splits or hours worked (Correct answer)
- It calculates overtime based on shift differentials
- It distributes direct deposit payments across multiple employee bank accounts
- It assigns workers' compensation codes to job titles
Correct answer: It allocates payroll costs across multiple departments, cost centers, or projects based on predefined percentage splits or hours worked
Labor distribution in ADP splits payroll expenses across departments, cost centers, or projects, enabling granular financial reporting and accurate budget tracking by business unit.
ADP Payroll Accounting and Reconciliation 2
What is the difference between a payroll void and a payroll reversal in ADP?