CPP Basic 2 — Questions and Answers
Question 1: An employee is paid $18/hr and works 50 hours in a workweek. What is their total gross pay under FLSA?
- $900.00
- $945.00
- $990.00 (Correct answer)
- $1,080.00
Correct answer: $990.00
Regular pay: 40 × $18 = $720; overtime: 10 × $27 (1.5 × $18) = $270; total gross pay = $990.
Question 2: Which IRS form is used to report an employee's annual wages and taxes withheld?
- Form 1099-NEC
- Form W-2 (Correct answer)
- Form 941
- Form W-4
Correct answer: Form W-2
Form W-2 reports annual wages paid and taxes withheld for each employee and must be furnished by January 31.
Question 3: What is the current Social Security tax rate paid by each employee (employee share only)?
- 5.65%
- 7.65%
- 6.20% (Correct answer)
- 1.45%
Correct answer: 6.20%
The employee Social Security (OASDI) tax rate is 6.2%, and the employer matches the same 6.2%.
Question 4: Which of the following fringe benefits is generally excluded from an employee's gross income?
- Cash bonus
- Personal use of company car
- Employer-paid health insurance premiums (Correct answer)
- Gift card worth $50
Correct answer: Employer-paid health insurance premiums
Employer-paid health insurance premiums are excluded from employees' gross income under IRC §106.
Question 5: A company changes payroll frequency from biweekly to semimonthly. How many paychecks will employees receive per year under the new schedule?
- 24 (Correct answer)
- 26
- 52
- 12
Correct answer: 24
Semimonthly means twice per month, resulting in 24 paychecks per year (2 × 12 months).
Question 6: Under the FLSA, which category of workers is NOT required to receive overtime pay?
- Non-exempt hourly workers
- Part-time employees
- Exempt salaried executives meeting the salary basis test (Correct answer)
- Tipped employees earning below minimum wage
Correct answer: Exempt salaried executives meeting the salary basis test
Exempt employees who meet FLSA salary basis and duties tests (executive, administrative, professional) are not entitled to overtime.
Question 7: What is the purpose of Form SS-4?
- To report Social Security wages to SSA
- To apply for an Employer Identification Number (EIN) (Correct answer)
- To request a Social Security card for a new hire
- To authorize electronic tax deposits
Correct answer: To apply for an Employer Identification Number (EIN)
Form SS-4 is the Application for Employer Identification Number filed with the IRS to obtain an EIN.
CPP Basic 2
An employee is paid $18/hr and works 50 hours in a workweek.
What is their total gross pay under FLSA?