CPP MCQ 5

Question 1

An employee has the following deductions: federal income tax $200, Social Security $93, Medicare $31, state income tax $75, and a Section 125 health premium $150. What is the employee's net pay if gross wages are $1,500?

Accepted Answer

$951

Answer

Net pay = $1,500 − $200 − $93 − $31 − $75 − $150 = $951.

Question 2

Which of the following correctly describes a 'constructive receipt' of wages?

Accepted Answer

Wages made available to the employee without substantial restriction, even if not yet collected

Answer

Under the constructive receipt doctrine, income is taxable when it is made available to the taxpayer without substantial restriction, regardless of when actually received.

Question 3

Under the FLSA, which of the following employees is most likely to qualify for the executive exemption from overtime?

Accepted Answer

A manager who earns $684/week, directs five full-time employees, and has authority to hire

Answer

The executive exemption requires a minimum salary of $684/week, primary duty of managing, directing at least two full-time employees, and authority over hiring/firing decisions.

Question 4

Which payroll concept describes the process of increasing a net pay amount to arrive at the gross pay that results in that exact net after all withholdings?

Accepted Answer

Gross-up calculation

Answer

A gross-up calculation determines the gross wage needed so that after all taxes and deductions, the employee receives a specific net amount.

Question 5

Under the FLSA, the 'fluctuating workweek' (FWW) method of computing overtime allows an employer to pay an overtime premium of:

Accepted Answer

0.5 times the regular rate for all overtime hours

Answer

Under the FWW method, because the fixed salary compensates for all hours including overtime, only the additional 0.5x premium is owed for overtime hours.

CPP - Certified Payroll Professional Practice Test

CPP - Certified Payroll Professional Practice Test

CPP MCQ 5