ADP Payroll Accounting and Reconciliation 3

Question 1

What is the matching principle and how does it apply to payroll accounting?

Accepted Answer

Payroll expenses should be recognized in the same period as the revenue they help generate, requiring accruals for unpaid wages at period-end

Answer

Payroll taxes must always equal the employee's federal withholding

Answer

Deductions must match the amounts on the benefits carrier invoice

Answer

Net pay must match the bank transfer amount exactly each period

Question 2

How does ADP's General Ledger Interface handle the reversal of an off-cycle payroll run?

Accepted Answer

It generates offsetting journal entries that reverse the original GL postings when the off-cycle run is voided or reversed in ADP

Answer

It automatically adjusts the next regular payroll GL entry

Answer

The reversal must be entered manually in the accounting system

Answer

It creates a new expense account entry for the reversal

Question 3

A company is acquired mid-year. How does ADP handle the transfer of year-to-date payroll data for the acquired employees?

Accepted Answer

ADP can import prior-period YTD balances for wages and taxes to ensure accurate W-2 reporting and tax deposit calculations for the remainder of the year

Answer

The new owner must start fresh with zero YTD balances for all employees

Answer

The prior employer is solely responsible for the full-year W-2

Answer

YTD balances transfer automatically without any data entry

Question 4

What is the purpose of the 'earned income credit advance' (now discontinued) and what replaced it for payroll purposes?

Accepted Answer

It allowed eligible employees to receive part of the EIC in each paycheck; it was discontinued in 2011 and replaced by requiring taxpayers to claim the full credit on their annual return

Answer

It is an ADP feature that automatically calculates the Earned Income Credit for all employees

Answer

It applies to employees who elect advance payment of their tax refund through direct deposit

Answer

It is a state-level benefit still available in certain states via ADP

Question 5

In payroll reconciliation, what does 'gross-to-net reconciliation' verify?

Accepted Answer

That gross wages minus all deductions and withholdings equal the net pay distributed to employees

Answer

That gross revenue equals net income for the pay period

Answer

That gross benefit costs equal net employer contributions

Answer

That the payroll bank account balance equals gross payroll

Question 6

Which ADP feature allows payroll data to be exported directly to accounting software such as QuickBooks or SAP?

Accepted Answer

ADP General Ledger Interface with configurable file export formats

Answer

ADP SmartCompliance Tax Export Module

Answer

ADP Workforce Analytics Dashboard

Answer

ADP Time & Attendance Integration