APA Benefits and Compensation 1

Question 1

What is the purpose of employee benefits in payroll?

Accepted Answer

To provide employees with non-wage compensation like insurance and retirement plans.

Answer

To provide a salary raise.

Answer

To ensure compliance with federal regulations.

Answer

To decrease employer payroll taxes.

Question 2

Which of the following is an example of a non-taxable fringe benefit?

Accepted Answer

Health insurance premiums paid by the employer.

Answer

Company-provided car.

Answer

Stock options.

Answer

Bonuses.

Question 3

What is the maximum limit for contributions to a 401(k) plan in 2025?

Accepted Answer

$22,500

Answer

$20,000

Answer

$19,500

Answer

$25,000

Question 4

What is the definition of taxable compensation in payroll?

Accepted Answer

Payments subject to income, social security, and Medicare taxes.

Answer

Any payments made to employees in any form.

Answer

Only base salary and wages.

Answer

Non-taxable fringe benefits.

Question 5

Which of the following benefits must be offered to employees under the Affordable Care Act (ACA)?

Accepted Answer

Health insurance coverage for full-time workers.

Answer

Health insurance coverage for part-time workers.

Answer

Paid sick leave.

Answer

Retirement contributions.

Question 6

Which of the following is true about employee stock options?

Accepted Answer

They are subject to tax at the time of exercise.

Answer

They are always taxable immediately.

Answer

They are exempt from tax.

Answer

They are tax-free if the employee holds the stock for more than 1 year.

Question 7

What is the key feature of a defined benefit pension plan?

Accepted Answer

Answer

The employer makes annual contributions to the employee's account.

Answer

The retirement benefit is predetermined and based on formulae.

Answer

The employee chooses how much to contribute.

Answer

There is no retirement benefit.

Question 8

What is the main advantage of offering employee benefits?

Accepted Answer

To create a competitive advantage in the labor market.

Answer

To reduce the overall payroll costs.

Answer

To comply with government mandates.

Answer

To reduce the employer's tax liability.

Question 9

Which of the following benefits are typically offered under a cafeteria plan?

Accepted Answer

A menu of different benefits from which employees can select.

Answer

Retirement contributions only.

Answer

Flexible work schedules.

Answer

Stock options.