FAC Payroll Processing & Administration 2 — Questions and Answers
Question 1: An employee is paid biweekly and earns $62,400 annually. What is their gross pay per pay period?
- $2,400.00 (Correct answer)
- $2,600.00
- $5,200.00
- $1,200.00
Correct answer: $2,400.00
$62,400 divided by 26 biweekly pay periods equals $2,400.00 per period.
Question 2: Which IRS form must employers use to report annual wages and taxes withheld for each employee?
- Form W-2 (Correct answer)
- Form 1099-NEC
- Form W-4
- Form 941
Correct answer: Form W-2
Form W-2 (Wage and Tax Statement) is issued to employees and filed with the SSA to report annual wages and withholdings.
Question 3: Under FLSA, which of the following workers is classified as non-exempt?
- An hourly warehouse associate earning $15/hr (Correct answer)
- A salaried IT manager earning $75,000/yr
- A salaried executive earning $200,000/yr
- A licensed pharmacist earning $90,000/yr
Correct answer: An hourly warehouse associate earning $15/hr
Hourly workers generally do not meet the salary basis test and are therefore non-exempt and entitled to overtime pay.
Question 4: What is the purpose of a payroll register?
- To record each employee's earnings, deductions, and net pay for a pay period (Correct answer)
- To file quarterly payroll taxes with the IRS
- To track employee vacation and PTO balances
- To document new hire onboarding paperwork
Correct answer: To record each employee's earnings, deductions, and net pay for a pay period
A payroll register is a detailed record summarizing all payroll activity including gross pay, deductions, and net pay for every employee in a given period.
Question 5: Which payroll deduction reduces an employee's federal taxable income dollar-for-dollar?
- Pre-tax 401(k) contributions (Correct answer)
- Roth 401(k) contributions
- After-tax life insurance premiums
- Wage garnishments
Correct answer: Pre-tax 401(k) contributions
Traditional pre-tax 401(k) contributions are excluded from federal taxable income, reducing the amount subject to withholding.
Question 6: A company discovers it under-withheld federal income tax from an employee's paycheck. What is the correct action?
- Withhold the additional amount from a subsequent paycheck and correct the 941 (Correct answer)
- Issue a corrected W-2 and refund the employee
- File Form 944 to report the discrepancy
- No correction is needed; the employee will handle it at tax time
Correct answer: Withhold the additional amount from a subsequent paycheck and correct the 941
Payroll errors in withholding should be corrected in a future paycheck and reflected on an amended Form 941-X if a prior quarter is affected.
Question 7: What does the acronym FICA stand for in payroll?
- Federal Insurance Contributions Act (Correct answer)
- Federal Income Collection Agency
- Financial Income Compensation Agreement
- Federal Individual Contribution Allocation
Correct answer: Federal Insurance Contributions Act
FICA stands for Federal Insurance Contributions Act, which mandates Social Security and Medicare taxes shared between employers and employees.
FAC Payroll Processing & Administration 2
An employee is paid biweekly and earns $62,400 annually.
What is their gross pay per pay period?