ADP Payroll Accounting and Reconciliation 1 — Questions and Answers
Question 1: What is the purpose of a payroll journal entry in ADP and which accounts are typically affected?
- To record the payroll expense, tax liabilities, and net pay; accounts include Wages Expense, Payroll Tax Expense, FICA Payable, Federal Income Tax Payable, and Cash (Correct answer)
- To record only the net direct deposit amounts to the Cash account
- To update the general ledger with benefit invoice amounts
- To record workers' compensation premiums
Correct answer: To record the payroll expense, tax liabilities, and net pay; accounts include Wages Expense, Payroll Tax Expense, FICA Payable, Federal Income Tax Payable, and Cash
Payroll journal entries in ADP record gross wages, deductions, tax liabilities, and net pay, affecting multiple expense and liability accounts in the general ledger.
Question 2: In ADP, which module or feature maps payroll data to the employer's general ledger accounts?
- ADP General Ledger (GL) Interface (Correct answer)
- ADP Direct Deposit Manager
- ADP Time & Attendance Sync
- ADP Benefits Enrollment Module
Correct answer: ADP General Ledger (GL) Interface
The ADP General Ledger Interface maps payroll earnings, deductions, and taxes to the employer's specific chart of accounts for seamless accounting system integration.
Question 3: What is payroll reconciliation and how frequently should it be performed?
- The process of comparing payroll register totals to tax filings, bank statements, and the general ledger; it should be performed each pay period and at quarter-end (Correct answer)
- An annual audit of all employee W-2 forms by a CPA
- The process of verifying direct deposit confirmations only
- A monthly comparison of benefit carrier invoices
Correct answer: The process of comparing payroll register totals to tax filings, bank statements, and the general ledger; it should be performed each pay period and at quarter-end
Payroll reconciliation involves matching payroll register data against tax filings, bank transactions, and the general ledger and should occur each pay period to catch errors early.
Question 4: When reconciling payroll, what does a variance between gross wages on the payroll register and wages on Form 941 typically indicate?
- A missed adjustment such as a correction, voided check, or non-taxable wage exclusion that was not properly recorded (Correct answer)
- A system glitch that requires ADP support
- An employee was paid twice in the quarter
- The wrong tax rate was applied to supplemental wages
Correct answer: A missed adjustment such as a correction, voided check, or non-taxable wage exclusion that was not properly recorded
Variances between the payroll register and Form 941 usually indicate an adjustment, voided transaction, or non-taxable exclusion that was not consistently handled in both records.
Question 5: What is the role of an 'accrued payroll' journal entry at month-end?
- To recognize wages earned but not yet paid by the end of the accounting period in the company's financial statements (Correct answer)
- To record direct deposit confirmations in the cash account
- To post benefit deductions to the carrier's account
- To reverse prior period payroll tax deposits
Correct answer: To recognize wages earned but not yet paid by the end of the accounting period in the company's financial statements
Accrued payroll entries record the liability for wages earned during the accounting period but not yet paid, ensuring accurate financial statements under accrual accounting.
Question 6: In ADP, what is the purpose of the Payroll Summary Report when conducting an end-of-period reconciliation?
- To provide totals for gross pay, deductions, taxes, and net pay by employee and department for reconciliation against the general ledger (Correct answer)
- To list all employees who received overtime during the period
- To detail individual direct deposit bank transactions
- To show benefit enrollment changes for the period
Correct answer: To provide totals for gross pay, deductions, taxes, and net pay by employee and department for reconciliation against the general ledger
The Payroll Summary Report in ADP aggregates gross pay, deductions, taxes, and net pay by employee and cost center, serving as the primary reconciliation document for accounting purposes.
ADP Payroll Accounting and Reconciliation 1
What is the purpose of a payroll journal entry in ADP and which accounts are typically affected?