IAB Payroll Processing & Administration 3

Question 1

Which IRS form is used to report compensation paid to independent contractors who are paid $600 or more during the tax year?

Accepted Answer

Form 1099-NEC

Answer

Form W-2

Answer

Form 941

Answer

Form 1096

Question 2

An employer's total FUTA tax liability is $700 for the year. At what point must this amount be deposited?

Accepted Answer

When the cumulative FUTA liability exceeds $500 at quarter-end

Answer

Monthly along with FICA deposits

Answer

By January 31 of the following year

Answer

Quarterly regardless of the amount owed

Question 3

Which concept describes the illegal practice of classifying workers as independent contractors to avoid payroll tax obligations when they function as employees?

Accepted Answer

Worker misclassification

Answer

Wage garnishment

Answer

Payroll fraud

Answer

Tax evasion

Question 4

Under the IRS rules, which of the following is a key factor in the 'common law' test used to determine employee versus independent contractor status?

Accepted Answer

The degree of behavioral control the business has over how work is performed

Answer

Whether the worker holds a professional license

Answer

Whether the worker is paid by invoice

Answer

The total dollar amount paid to the worker annually

Question 5

What is the purpose of a payroll register?

Accepted Answer

To summarize gross pay, deductions, and net pay for all employees for each pay period

Answer

To record journal entries for individual employee tax filings

Answer

To calculate the employer's share of FUTA taxes annually

Answer

To document employee performance reviews

Question 6

Which journal entry correctly records the employer's matching FICA taxes for Social Security and Medicare?

Accepted Answer

Debit: FICA Tax Expense; Credit: FICA Taxes Payable

Answer

Debit: Wages Expense; Credit: FICA Taxes Payable

Answer

Debit: FICA Taxes Payable; Credit: Cash

Answer

Debit: Employee Benefits Expense; Credit: Wages Payable

Question 7

How long must employers generally retain payroll records such as time cards, wage rates, and tax withholding information under federal law?

Accepted Answer

3 years

Answer

1 year

Answer

2 years

Answer

7 years