CA Payroll Processing & Administration 2

Question 1

An employee earns $3,200 bi-weekly. What is the correct annualized salary used for federal income tax withholding purposes?

Accepted Answer

$83,200

Answer

Bi-weekly pay periods (26 per year) × $3,200 = $83,200 annualized salary.

Question 2

Under the Fair Labor Standards Act (FLSA), which of the following employees is classified as exempt from overtime pay requirements?

Accepted Answer

A salaried executive earning $684/week managing two or more employees

Answer

The FLSA executive exemption requires a salary of at least $684/week and management of two or more employees as a primary duty.

Question 3

A company pays employees on a semi-monthly basis. How many payroll periods occur annually?

Accepted Answer

24

Answer

Semi-monthly payroll occurs twice per month, resulting in 24 pay periods per year.

Question 4

Which IRS form must an employer use to report annual wage and tax information for each employee?

Accepted Answer

Form W-2

Answer

Form W-2 (Wage and Tax Statement) is filed annually to report each employee's earnings and withholdings.

Question 5

When an employee claims 'exempt' on their Form W-4, what does the employer do?

Accepted Answer

Withholds no federal income tax from the employee's wages

Answer

An 'exempt' W-4 claim means the employer withholds zero federal income tax, though FICA taxes still apply.

(CA) Chartered Certified Accountant Practice Test