CPP Take-home Quiz – Chapters 3, 5 & 6
1. All of the following benefits are taxable fringe benefits EXCEPT:
A. personal use of company vehicle.
B. back-pay awards.
C. third-party sick pay relative to employer's contribution.
D. business use of company vehicle.
2. An employee died in February and had total YTD wages in the amount of $1,975.00. The
employee was owed wages of $1,500.00, which were paid on a regular semimonthly payday in
March. The employee claimed married with one allowance on Form W-4. Using the Wage-Bracket
Method, calculate the amount to be withheld from the payment due for federal income, social
security, and Medicare taxes.
A. $0
B. $114.75
C. $225.75
D. $222.75
3. If an employer requires a reversal of an individual's direct deposit without the employee's
authorization, it must be completed:
A. within 24 hours from the date of discovery.
B. within 14 days of the settlement date.
C. prior to the next payroll.
D. within five business days of the settlement date.
4. When an employer does not withhold the taxes on fringe benefits from an employee but recovers
the taxes from the employee's other wages, the taxes must be recovered by the following:
A. January 1.
B. January 31.
C. February 28.
D. April 1.
5. An employee's profit sharing bonus is payable in the year following the employee's death. How
should the bonus be taxed and reported?
A. Withhold no taxes and report the bonus amount on Form 1099-MISC.
B. Withhold the FIT, social security and Medicare taxes; report the bonus amount only on Form
W-2.
C. Withhold social security and Medicare taxes and report the taxes on Form W-2 and the bonus
amount on Form 1099-MISC.
D. Withhold social security and Medicare taxes only and report the bonus amount only on Form
W-2.
CPP Take-home Quiz – Chapters 3, 5 & 6
6. How frequently must an employer recognize the value of noncash fringe benefits as income?
A. With every payroll
B. At least once a year, no later than December 31
C. At least quarterly
D. Along with its regular tax deposit
7. In a direct deposit system, the ACH file is set up by the:
A. originating financial institution.
B. receiving financial institution.
C. Federal Reserve Bank.
D. employer.
8. If a Form W-4 is incomplete, the employer must:
A. reject the form.
B. implement the form, and ask the employee to complete another form.
C. tell the employee the form is incomplete.
D. ask the employee to provide the missing information on the form.
9. Which of the following payroll issues is governed only by state agencies?
A. Child labor
B. Method of payment
C. Minimum wage
D. Exempt/nonexempt status
10. An employee is required to file a new Form W-4 in all the following situations except:
A. when changing filing status from married to single or head of household.
B. when itemized deductions increase.
C. when a divorce is finalized.
D. with the death of a dependent in the previous year.
11. What is the employer's Medicare tax rate when the employee has year-to-date Medicare wages in
excess of $200,000?
A. 0.9%
B. 1.45%
C. 2.35%
D. 2.9%
CPP Take-home Quiz – Chapters 3, 5 & 6
12. The value of an employee's personal use of a company-provided car in November 2014 was
$112.00. The company uses the special accounting rule for reporting personal use of the
company provided cars, November 1 through October 31. When will the $112.00 be reported on
the employee's Form W-2?
A. December 31, 2014
B. January 31, 2015
C. October 31, 2015
D. January 31, 2016
13. To correct a direct deposit payment made in error, within five banking days the employer must
generate a:
A. single-entry reversal.
B. credit authorization.
C. double-entry reversal.
D. debit authorization.
14. As of December 1, an employee had earned $152,700.00 in salary, commissions, and bonuses.
The employee's semimonthly salary is $2,400.00. Calculate the social security and Medicare
taxes to be withheld from the employee's first pay in December.
A. $183.60
B. $56.40
C. $34.80
D. $0
15. Noncash fringe benefits included in gross income are valued at the:
A. fair market value.
B. employee's perception of the value.
C. employer's cost.
D. cost on January 1.
16. Which of the following federal taxes, if any, must an employer withhold from an employee's tips
when the amount reported is in excess of $20.00 in the month?
A. Federal income tax only
B. Social security and Medicare taxes only
C. No taxes are required to be withheld
D. Federal income, social security, and Medicare taxes
CPP Take-home Quiz – Chapters 3, 5 & 6
17. Which of the following requirements governs the frequency of paying employees?
A. FLSA rules
B. State laws
C. Company procedures
D. IRS regulations
18. In April, an employee with total YTD wages of $54,000.00 received a net bonus in the amount of
$240.00. The employee works in a state with no state or local income tax withholding. Using the
Optional Flat Rate Method, calculate the gross amount of the employee's bonus.
A. $356.35
B. $318.36
C. $735.07
D. $320.00
19. Which of the following payroll issues is ONLY governed by state agencies?
A. Exempt or nonexempt employee status
B. Timing of final payment to a terminated employee
C. Child labor
D. Overtime
20. An employer transfers an employee who meets the time test to another office located 1,400 miles
away. The employer agrees to pay all qualified moving expenses. While house hunting in the new
location, the employee spent $400.00 on hotel bills, $200.00 on meals, and $500.00 on airfare.
Calculate the amount the employer will reimburse to the employee.
A. $1100.00
B. $900.00
C. $500.00
D. $0
21. Four employees carpool to work in an employee's 8-passenger van that is used only to commute
to and from work. The employer reimburses all of the commuting expenses. The monthly costs
are $135.00. How much of the carpool reimbursement is taxable?
A. $135
B. $130
C. $5
D. $0
CPP Take-home Quiz – Chapters 3, 5 & 6
22. An electronic Form W-4 must contain:
A. the employee's written signature.
B. the last time the employee completed a Form W-4.
C. the employee's marital status and withholding allowances before the change.
D. a perjury statement.
23. An employee rides 530 miles each month to work in a company provided van, which seats seven
passengers. The employer has organized a vanpool, offering rides to four other employees. The
employer reimburses the employee for the commuting expenses at the cents-per-mile method.
Calculate the amount of commuting reimbursement that is taxable.
A. $296.80
B. $166.80
C. $130.00
D. $0
24. Which of the following employer-paid meals or lodging are taxable?
A. Substantiated meals while traveling away from home on business
B. Meals while moving from an old home to a new home.
C. Documented hotel bill when away from home for a company-sponsored conference.
D. Subsidized meals in the company's all-employee cafeteria
25. Using the Wage-Bracket Method, calculate the federal income tax withholding based on the
following information. An employee earns $780.00 semimonthly and claims single with 1
allowance(s).
A. $58
B. $86
C. $61
D. $65
26. A company pays the membership fee to the American Payroll Association for an employee in the
payroll department. The IRC defines this payment as:
A. taxable compensation.
B. de minimis fringes.
C. no-additional-cost services.
D. working condition fringes.
CPP Take-home Quiz – Chapters 3, 5 & 6
27. A disadvantage of EFT compared to issuing paper checks is:
A. it is easier to handle vacation pay.
B. the need for additional information from the employee.
C. less chance of loss by theft or fraud.
D. lower cost per payment.
28. Employer-paid meals or lodging are taxable when:
A. a travel advance is provided under the requirements of an accountable plan for meals and
lodging on an upcoming business trip.
B. substantiated meals while traveling away from home on business are reimbursed.
C. employees are required to stay in the company's on-site quarters when working in the field
locations.
D. a documented hotel bill is submitted when an employee works late and has no transportation
home.
29. Using the Aggregate Method and the Wage-Bracket Method, calculate the employee's federal
income tax based on the following information. An employee earns $620.00 each biweekly pay
period and has received a $1,000.00 bonus paid with this biweekly pay. The employee claims
married, 2 allowances.
A. $115
B. $0
C. $38
D. $77
30. What organization defines the data to be provided when electronically transferring an employee's
pay into the employee's bank account?
A. The employer
B. The employer's bank
C. The employee's bank
D. NACHA
31. When an employee's YTD wages exceed the social security maximum wage base but are less
than $200,000, what adjustment, if any, is made in the gross-up formula?
A. No adjustment is made
B. The total tax percentage is increased by the Medicare tax rate
C. An adjustment to the net amount is made
D. The total tax percentage is reduced by the social security tax rate
CPP Take-home Quiz – Chapters 3, 5 & 6
32. An employee receives a $2,100.00 bonus at the end of the year. At that time, the employee's
year-to-date taxable compensation was $127,000.00. The employee's manager has requested
that payroll gross-up the value of the bonus. There is no state or local tax withholding. Using the
Optional Flat Rate Method, calculate the taxable income on the bonus.
A. $3,118.04
B. $2,655.45
C. $2,855.20
D. $2,800.00
33. Which of the following payroll issues are governed only by the states?
A. Child support
B. Escheat laws
C. Overtime
D. Levies
34. An employee received his paycheck on Friday and died on Saturday prior to cashing the
paycheck. What, if anything, should the payroll department do?
A. Reissue the check to the employee's estate/beneficiary.
B. Reissue the check without the federal income tax withholding.
C. Reissue the check with no tax withholding.
D. Nothing, the check was received by the employee.
35. When an employee receiving payment from a third-party sick pay provider fails to complete a
Form W-4S, how much, if any, federal income tax is withheld from the payments?
A. No federal income tax is withheld.
B. A flat $20.00 per payment
C. Withholding is based on marital status of single and zero allowances
D. A flat 25% per payment
36. Using the Percentage Method, calculate the federal income tax withholding, based on the
following information. An employee earns $700.00 semimonthly and claims single with 2
allowance(s).
A. $94.00
B. $37.08
C. $27.68
D. $29.00