FREE Certified Payroll Professional Questions and Answers

Question 1

What steps must an employer take after receiving notification from the IRS that an employee's Form W-4 is invalid?

Accepted Answer

Withhold based on data from the Internal Revenue Service

Answer

If the IRS notifies an employer that an employee's Form W-4 is invalid, the employer must generally disregard the invalid W-4 and withhold federal income tax based on the information provided by the IRS. The IRS typically specifies the withholding rate (e.g., single with no other adjustments) to be used. The employer should also inform the employee of the IRS notification and advise them to submit a new, valid Form W-4 or contact the IRS to resolve the issue.

Question 2

What is the BEST method to manage miscellaneous payments using online input?

Accepted Answer

A comparison between the totals from the online report and the predetermined totals from the source documents

Answer

The BEST method to manage miscellaneous payments using online input for accuracy and control is to reconcile the system's output totals with independently predetermined totals from the source documents. This 'batch control' method ensures that all transactions entered online have been accurately captured and processed. It helps identify any discrepancies between what was intended to be input and what was actually recorded, serving as a robust control against errors and omissions.

Question 3

Employers are required by the Family and Medical Leave Act to keep records for:

Accepted Answer

3 years

Answer

The Family and Medical Leave Act (FMLA) requires employers to maintain specific records related to FMLA leave for a period of three years. These records include basic payroll data, dates FMLA leave is taken, hours of leave, copies of employee notices, and documents describing employee benefits or policies regarding leave. This retention period ensures compliance and allows for verification if needed during audits or investigations.

Question 4

The primary benefit of developing an in-house system is:

Accepted Answer

The entire computer system is controlled by the employer

Answer

The primary benefit of developing an in-house payroll system is the complete control it offers the employer over the entire computer system. This includes unparalleled control over customization, data security, integration with other internal systems, and the ability to adapt quickly to specific company needs or policy changes. While it can be resource-intensive, this level of autonomy is a significant advantage for organizations with unique requirements.

Question 5

The payroll accrual entry serves what purpose?

Accepted Answer

Recognizing expenses in the period during which they were incurred

Answer

A payroll accrual entry is made at the end of an accounting period to recognize payroll expenses that have been incurred but not yet paid or recorded. This adheres to the accrual basis of accounting, which matches expenses to the period in which they are incurred, regardless of when the cash payment is made. For example, if a pay period ends on December 28th but payday is January 5th, the wages for December 28-31 would be accrued in December to accurately reflect expenses.

CPP - Certified Payroll Professional Practice Test

CPP - Certified Payroll Professional Practice Test

FREE Certified Payroll Professional Questions and Answers