FREE CPP MCQ Questions and Answers

Question 1

An external auditor will accept all of the following procedures EXCEPT:

Accepted Answer

Blank payroll checks are kept in storage at the payroll department.

Answer

External auditors seek strong internal controls, particularly segregation of duties, to prevent fraud and errors. Keeping blank payroll checks in the payroll department creates a significant control weakness because the same department that calculates and processes payroll also has access to the means of payment. This lack of segregation of duties increases the risk of unauthorized payments or fraud, which an auditor would not accept.

Question 2

Which benefit, even if it is limited to highly paid employees, is tax-free for all employees?

Accepted Answer

Transportation-related fringe benefits

Answer

Qualified transportation-related fringe benefits, such as transit passes, qualified parking, and vanpooling, are generally excludable from an employee's gross income up to certain statutory limits. This tax-free status applies to all employees, regardless of their pay level, making it a universally tax-advantaged benefit.

Question 3

Which of the following records must be kept for three years as required by the FLSA?

Accepted Answer

A record of the employee's responsibilities

Answer

The Fair Labor Standards Act (FLSA) mandates that certain records be kept for specific durations. A record of an employee's occupation, which includes their job duties and responsibilities, falls under the category of payroll records and must be retained for three years. Daily time records, on the other hand, are typically required to be kept for two years.

Question 4

Which of the following describes an independent contractor?

Accepted Answer

A repairman who is occasionally called in to keep the dental office's PCs operating properly.

Answer

An independent contractor is distinguished by the degree of control the hiring entity has over the worker. A repairman called in occasionally to fix PCs typically sets their own hours, uses their own methods and tools, and offers services to multiple clients, indicating a lack of employer control over the 'how' and 'when' of the work. This autonomy is a hallmark characteristic of an independent contractor, unlike the other options which describe various forms of employment.

Question 5

In 2025, employee Cindy's company paid her $620 for meal expenses that she could prove she had while relocating from her previous home to her new workplace. What portion of this cost, if any, is not included in Cindy's federally taxable income?

Accepted Answer

$310

Answer

While most relocation expenses for non-military employees are taxable from 2018-2025, meal expenses often have a specific treatment. If the $620 for meals is considered a business-related meal expense incurred during the relocation process, only 50% of these expenses are typically considered non-taxable. Therefore, $620 multiplied by 0.50 equals $310, which would be the portion not included in Cindy's federally taxable income.

CPP - Certified Payroll Professional Practice Test

CPP - Certified Payroll Professional Practice Test

FREE CPP MCQ Questions and Answers