Payroll Accounting and Reporting Flashcards
7 cards from real CPM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Payroll Accounting and Reporting flashcards as text
Which of the following best describes the purpose of Form W-3?
Answer: It is the transmittal form that summarizes all W-2s submitted to the Social Security Administration
Form W-3 is the transmittal cover sheet that accompanies paper W-2 copies sent to the SSA, summarizing total wages and taxes from all W-2s.
An employer uses a fiscal year ending June 30. How does this affect payroll tax reporting deadlines?
Answer: Payroll tax reporting deadlines are based on the calendar year regardless of the employer's fiscal year
Payroll tax forms (941, 940, W-2) follow calendar-year deadlines set by the IRS, not the employer's fiscal year.
Which internal control best prevents unauthorized changes to employee pay rates in the payroll system?
Answer: Segregating the duties of payroll data entry from payroll approval and HR master file changes
Segregating HR master file maintenance from payroll processing prevents a single employee from creating fraudulent pay changes and processing them without detection.
A payroll accrual is reversed at the start of the new period. What is the accounting rationale for this reversal?
Answer: To avoid double-counting the expense when the actual payroll is recorded in the new period
Reversing the accrual at period start prevents the payroll expense from being recorded twice when the actual payroll entry is made in the new period.
Which of the following would cause a discrepancy between total payroll expense on the income statement and total wages reported on Form 941?
Answer: Including non-cash fringe benefits taxable for FICA but not reported on Form 941
Non-cash fringe benefits added to W-2 wages for FICA purposes may not align with general ledger payroll expense, creating a timing or classification difference.
Under the lookback period rule for Form 941 depositors, the lookback period for calendar year 2026 is:
Answer: July 1, 2024 through June 30, 2025
The lookback period for a calendar year is the 12-month period ending June 30 of the prior year (July 1, 2024–June 30, 2025 for 2026).
Which statement about garnishment accounting is correct?
Answer: The employer credits a garnishment payable liability account when withholding from the employee's paycheck
When withholding a garnishment, the employer debits the employee's net pay and credits a Garnishment Payable liability until remitting to the appropriate agency.