Payroll Fundamentals Flashcards
9 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 9 Payroll Fundamentals flashcards as text
What is the primary purpose of payroll processing?
Answer: To ensure employees are paid on time and accurately
Payroll processing involves calculating employee wages, withholding taxes, and ensuring timely and accurate payments.
What does gross pay refer to in payroll calculations?
Answer: Total earnings before deductions
Gross pay refers to the total earnings of an employee before any deductions such as taxes, retirement, or health benefits.
Why is payroll compliance essential for businesses?
Answer: To avoid legal penalties and ensure fair treatment
Payroll compliance ensures that companies meet all legal obligations, avoid penalties, and provide accurate compensation to employees.
Which of the following is NOT typically withheld from an employee's paycheck?
Answer: Employer-paid social security contributions
Common payroll deductions include federal and state taxes, health insurance, and retirement contributions. However, some items are not typically withheld directly from paychecks.
What is the W-2 form used for in payroll?
Answer: Reporting employee wages and tax withholdings
The W-2 form reports an employee's annual earnings, taxes withheld, and other deductions, and is used for filing individual income tax returns.
Why is payroll reconciliation important?
Answer: To ensure accurate financial reporting and compliance
Payroll reconciliation ensures that the payroll data is accurate, and it helps verify that taxes and other deductions are correctly withheld and remitted.
What is the role of direct deposit in payroll?
Answer: It enables quick, secure, and efficient payment processing
Direct deposit allows employees to receive their wages electronically, making payroll more efficient and reducing the risk of errors associated with paper checks.
What is the primary purpose of the payroll tax audit?
Answer: To verify compliance with tax laws and regulations
A payroll tax audit is performed to ensure that taxes are accurately withheld, reported, and remitted to the correct government authorities.
How often should payroll audits be conducted?
Answer: At least annually, or whenever there are significant changes
Payroll audits should be conducted regularly to ensure accuracy, compliance, and to identify potential issues in payroll processing.