CAT Payroll Processing & Administration 2 — Questions and Answers
Question 1: An employee is paid bi-weekly. What is the number of pay periods in a standard year?
- 24
- 26 (Correct answer)
- 52
- 12
Correct answer: 26
Bi-weekly pay means employees are paid every two weeks, resulting in 26 pay periods per year (52 weeks ÷ 2).
Question 2: Which IRS form does an employee complete to determine the amount of federal income tax withheld from their paycheck?
- Form W-2
- Form 941
- Form W-4 (Correct answer)
- Form 1099
Correct answer: Form W-4
Form W-4 (Employee's Withholding Certificate) is completed by employees to tell employers how much federal income tax to withhold.
Question 3: Under the Fair Labor Standards Act (FLSA), what is the minimum overtime rate for hours worked over 40 in a workweek?
- 1.25 times the regular rate
- 1.5 times the regular rate (Correct answer)
- 2 times the regular rate
- 1.75 times the regular rate
Correct answer: 1.5 times the regular rate
The FLSA requires non-exempt employees to be paid at least one and one-half (1.5) times their regular rate for hours over 40 in a workweek.
Question 4: What is the employer's share of the Social Security tax rate as of 2024?
- 5.2%
- 7.65%
- 6.2% (Correct answer)
- 12.4%
Correct answer: 6.2%
Employers pay 6.2% of an employee's wages for Social Security tax, matching the employee's 6.2% contribution.
Question 5: Which payroll journal entry correctly records the employer's payroll tax expense?
- Debit Payroll Tax Expense, Credit Cash
- Debit Payroll Tax Expense, Credit Payroll Tax Payable (Correct answer)
- Debit Payroll Tax Payable, Credit Cash
- Debit Wages Expense, Credit Payroll Tax Payable
Correct answer: Debit Payroll Tax Expense, Credit Payroll Tax Payable
When employer payroll taxes are accrued, the debit goes to Payroll Tax Expense and the credit to Payroll Tax Payable (a liability).
Question 6: A garnishment order requires withholding $300 per week from an employee's wages. The employee earns $800 net. Under Title III of the Consumer Credit Protection Act, what is the maximum garnishable amount?
- $200 (Correct answer)
- $300
- $400
- $800
Correct answer: $200
Title III limits garnishment to 25% of disposable earnings; 25% of $800 = $200, which is less than $300, so only $200 can be withheld.
Question 7: When must employers deposit federal payroll taxes if they are a monthly depositor?
- By the 15th of the same month wages are paid
- By the 15th of the following month (Correct answer)
- Within 3 business days of the payroll date
- Quarterly with Form 941
Correct answer: By the 15th of the following month
Monthly depositors must deposit payroll taxes accumulated during a calendar month by the 15th day of the following month.
CAT Payroll Processing & Administration 2
An employee is paid bi-weekly.
What is the number of pay periods in a standard year?