Financial Analysis & Reporting Flashcards
7 cards from real CPS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Analysis & Reporting flashcards as text
Which ratio is used to measure how efficiently a company uses its labor force relative to the goods or services it produces?
Answer: Labor productivity ratio
Labor productivity ratio measures output generated per unit of labor input, indicating how efficiently employees contribute to production.
A payroll journal entry debiting Salaries Expense and crediting Salaries Payable reflects which accounting concept?
Answer: Accrual basis accounting
Recording an expense as a liability before cash is paid is the hallmark of accrual accounting, which recognizes expenses when incurred.
A company wants to benchmark its benefits cost per employee against industry peers. Which figure should be used as the divisor?
Answer: Full-time equivalents (FTEs)
Using FTEs normalizes part-time and full-time workers into a comparable unit, making benchmarking more accurate across companies of different workforce compositions.
On a company's income statement, where do payroll-related expenses for production workers most commonly appear?
Answer: Cost of goods sold
Wages for production workers are a direct cost of manufacturing or producing goods and are therefore included in cost of goods sold.
A payroll specialist preparing year-end reports notices that total Social Security wages on Form W-3 differ from total gross wages. Which of the following BEST explains this?
Answer: Employees who reached the Social Security wage base during the year
Social Security tax only applies up to the annual wage base, so employees who exceeded it will have lower Social Security wages than gross wages, creating a difference.
Which financial report would a payroll manager review to confirm that payroll tax deposits were made on time and for the correct amounts?
Answer: Bank statement and tax deposit confirmation records
Bank statements and EFTPS deposit confirmations provide evidence of when tax deposits were made and the amounts transmitted to the IRS.
Which scenario would cause total payroll costs to increase without any change in headcount or pay rates?
Answer: An increase in employer-paid health insurance premiums
Higher employer-paid benefit premiums increase the total cost of employment even when wages and headcount remain unchanged.