Payroll MCQs
Payroll MCQs
The following Payroll MCQs have been compiled by our experts through research, in order to test your knowledge of the subject of Payroll. We encourage you to answer these 100 multiple-choice questions to assess your proficiency.
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1: Of the following, which is considered an employer-paid benefit?
A. Sick days.
B. Slack days.
C. Fake days.
D. Random office supplies.
2: What type of form is used to pay funds directly to employees bank account?
A. Payroll Distribution Form
B. Funds Transfer Form
C. ACH Direct Transfer Form
D. Direct Deposit Form
3: Which of the following is considered a withholding tax?
A. Payment tax.
B. Income tax.
C. Sales tax.
D. Inheritance tax.
4: Which is not entitled to company benefits?
A. Contractor
B. Employees with poor performance.
C. Managers.
D. Employees.
5: The pay earned by hourly-paid employees is usually referred to as?
A. Wage
B. Salary
6: The amount of pay that an employee "takes home" or can deposit into the bank is called?
A. Margin
B. Net
C. Gross
7: A bonus is listed under what category?
A. Benefits.
B. Shrinkage.
C. Rent.
D. Depreciation.
8: What is gross pay?
A. The total amount earned, after taxes
B. Neither of these
C. The total amount earned, before taxes
9: What is the primary objective of payroll?
A. Unilateral delivery of checks and mail.
B. Successful delivery of checks to management.
C. Accurate and timely payment to employees including deductions and withholdings.
D. Casual payment of employees at random intervals.
10: What is the function of payroll?
A. Accounting.
B. Records keeping.
C. The recording of salaries, wages, bonuses, and deductions.
D. To hand out paychecks.
11: Who is responsible for paying taxes deducted from employee's check?
A. The state of which the employee lives in is responsible for taxes deducted from an employee's check.
B. The IRS is responsible for the taxes deducted from an employee's check.
C. The employee is responsible for taxes deducted from their check.
D. The employer is responsible for paying taxes deducted from an employee's check to the appropriate agency.
12: What is an employee?
A. A person who gives an invoice to their client.
B. A person who is trained and hired.
C. A person using a 1099 for for tax reasons.
D. A person who is not employed.
13: True or false? A new employee must fill out a W-4.
A. True
B. False
14: What is a contractor?
A. A person who uses a W-2 for tax reasons.
B. Someone trained in-house.
C. A person receiving payment for a task in its entirety.
D. Someone receiving cash payments.
15: When can voluntary deductions be made?
A. Never.
B. When the government requests it.
C. Only when the employee has agreed to them.
D. Any time.
16: Why is payroll important from an accounting standpoint?
A. Payroll is important because it allocates funds to those deemed worthy.
B. Payroll is not important.
C. Payroll and the taxes therein significantly impact the success of the company.
D. Payroll is entrusted with donating money.
17: An employee damages equipment and a court orders their wages are withheld as repayment. This is known as:
A. garnishment
B. austerity
C. taxation
18: An employee has a HR status of 2080 annual hours, what is their employment status?
A. Commission
B. Seasonal
C. Full Time
D. None of the answers are correct
E. Part Time
19: Which is an example of a required deduction?
A. Preferred taxes.
B. Private taxes.
C. There are no required deductions.
D. State taxes
20: What is a pay period?
A. The time when employees pay their taxes.
B. The period in time when businesses have to pay their taxes.
C. The one time per year that employees are paid.
D. A recurring period of time that time is recorded and paid.
21: What is an Employer Identification Number for?
A. It is the healthcare code.
B. It identifies transactions in a business.
C. It identifies a businesses entity.
D. It does nothing.
22: What is the employers responsibility with regard to Medicare taxes?
A. Employers are only half responsible.
B. Employers are responsible for paying both the employer and employee's portion of the Medicare tax.
C. Nobody is responsible.
D. Employers are not responsible.
23: Which tax form does a contractor use?
A. 1099
B. 1077
C. 2055
D. 4531
24: Which tax form does an employee use?
A. W-5
B. W-1
C. W-8
D. W-2
25: If you were to purchase stock, how is it referred to in terms of payroll deductions?
A. Investment plan.
B. Employee stock purchase plan.
C. It is completely ignored.
D. Investing strategy.
26: What is the typical pay period?
A. Annually.
B. Bi-weekly.
C. Semi-annually.
D. Bi-monthly.
27: Which of the following is a payroll-related tax that is imposed on employers?
A. FICA taxes.
B. FISA taxes.
C. FINRA taxes.
D. NAFTA taxes.
28: What is an example of a voluntary deduction?
A. Income tax.
B. 401(k)
C. Sales tax.
D. Luxury tax.
29: An employee works 40 hours at $15 per hour. How much would their weekly pre-tax pay be?
A. $600
B. $480
C. $500
D. $700
30: What must all EIN applications disclose?
A. The true, legal owner of the business.
B. The agreements that a business is in.
C. The products that the business sells.
D. The amount of money the business makes.
31: Which tax is unique to the states, California, Hawaii, New Jersey, New York, and Rhode Island?
A. No taxes.
B. Disability insurance tax.
C. Extraordinarily low taxes.
D. Tea tax.
32: What does the initials EIC stands for?
A. Earned Income Credit
B. Earned Interest Credit
C. Earned Income Check
D. Earnings Income Tax Credit
E. None of these answers are correct
33: What does IRA stand for?
A. Independent Revenue Account
B. Individual Retirement Account
C. None of these
D. Interest Returns Account
34: What is a reason an employee might see a garnishment on their paycheck?
A. Logical payment of bills.
B. Child support.
C. Good performance.
D. Sound financial planning.
35: True or false? A fiscal year must start on January 1st.
A. False
B. True
36: Which of the following do employees use to report annual income tax returns?
A. I-95
B. I-9
C. W-4
D. W-2
37: 401K deductions are calculated from an employee's ...
A. None of the answers are correct
B. After taxes but before any other deductions are taken
C. Gross Wages before taxes
D. Net wages after taxes
38: The combination of the Social Security tax and the Medicare tax is referred to by what acronym?
A. SSMT
B. FICA
39: What specific criteria must be used when making a voluntary deduction for meals?
A. It must be during work hours.
B. It must be at work.
C. It must be after work hours.
D. The meal must have been job-related.
40: Which is listed under payroll taxes and costs?
A. Medicare.
B. Income
C. Debt
D. Rent
41: How many yearly paychecks should a bi-weekly pay period yield to an employee?
A. 53
B. 26
C. 82
D. 36
42: In the General Journal, which side would your payroll tax expense be located?
A. Journal
B. Debit
C. Credit
D. Ledger
43: What forms are filed at the end of the year to report employee wages to IRS?
A. W-2
B. 1099
C. I-9
D. W-4
E. 1040
44: What tax document is provided at the end of the year to independent contractors and includes all payments paid?
A. W-4
B. I-9
C. 1099 Misc Form
D. W-2
E. W-9
45: Which employee tax elected filing status will deduct the highest withholding amount?
A. Single 5
B. Single 0
C. Widowed 0
D. Divorced 2
E. Married 1
46: What requirements does the FLSA have for records keeping?
A. None beside accurate record keeping.
B. Higher taxes for lower performance.
C. Lower taxes for higher performance.
D. Payment for tenured employees.
47: What is the current medicare taxable rate for 2012?
A. 1.45%
B. 4.2%
C. 7.65%
D. 5.2%
E. 5.65%
48: What is an ACH payment related to?
A. Local taxation
B. Direct deposits
C. Financial privacy
D. All of these
49: Which form do you use to declare exemptions and allowances?
A. W-6
B. W-4
C. W-2
D. WD-40
50: What is the standard rate for Medicare taxes?
A. 1.23%
B. 1.45%
C. 2%
D. 10%
51: What type of form is used to determine the amount of withholding taxes deducted from an employees check?
A. 1099
B. W-2
C. I-9
D. W-4
52: Are you obligated to set up a method of taxation for independent contractors?
A. The government will set up their taxes for them.
B. Yes.
C. No.
D. You must mutually agree on taxation.
53: What three payroll taxes are employers responsible for?
A. FICA, MUTA, SUNA
B. FICA, FUTA, PUMA
C. FICA, FUTA, SUPA
D. FICA, FUTA, SUTA
54: Which form is filled out by the employee and includes an employees withholding for federal tax purposes?
A. 1099
B. 1040
C. W-2
D. W-4
55: What is the maximum taxable earnings allowed for medicare?
A. $106,800
B. $102,400
C. The is no maximum taxable earnings for medicare?
D. $145,000
E. $110,100
56: Who is a “nominee”?
A. Delegated parties who are given limited authority to act on behalf of an entity for duties including payroll.
B. The Guarantor.
C. An employee who makes significant political contributions.
D. Delegated parties given complete authoriy to act on behalf of an entity for duties including payroll.
57: What form is required to verify employment eligibility for a new or potential employee?
A. W-2
B. W-9
C. 1099
D. W-4
E. I-9
58: What is a tax outside the scope of Federal taxes that an employer and employee are legally obligated to?
A. State Income Tax
B. Medicare tax.
C. Federal income tax.
D. Inheritance tax.
59: If exempt employee Dr. Banks worked 48 hours in one week and 46 hours in a second week, how much overtime should he be paid?
A. 14 hours OT
B. None
C. 28 hours OT
D. 8 hours OT
E. 6 hours OT
60: If you were recording journal entries for wage expenses, where would they be listed?
A. Debit.
B. Ledger.
C. Credit.
D. Journal.
61: An exempt employee is exempt from...?
A. Medicare Taxes
B. All Federal and State taxes
C. Social Security Taxes
D. None of the above answers are correct
E. Overtime
62: When accounting for taxes payable, how are they listed?
A. Journal.
B. Ledger.
C. Debit.
D. Credit.
63: What type of tax return is used to file employee deducted and employer matched payroll taxes at the end of a quarter?
A. 945 Tax Return
B. 941 Tax Return
C. UCT-6
D. 940 Tax Return
64: What two accounting records are payroll typically recorded to?
A. Front and back.
B. Income Statement and Balance Sheet
C. They are not recorded.
D. General ledger and income statement.
65: A employee garnishment is usually taken out of an employee's check when?
A. After taxes. Amount is deducted from the net check.
B. Before taxes to assure there is enough to cover the garnishment.
C. Garnishments are taken from the gross amount of check
D. Garnishments are a pre-taxed deduction.
66: Which tax can you elect to be paid for in advance in your check if you qualify?
A. Fica
B. SS Tax
C. Medicare
D. FIT
E. EIC
67: What form must a contractor include to not be considered an employee?
A. Invoice
B. Agreement.
C. Check.
D. NDA
68: Which tax return is used to file federal annual employer paid taxes?
A. 915 Tax Return
B. 941 Tax Return
C. 945 Tax Return
D. 943 Tax Return
E. 940 Tax Return
69: Which form is used to correct an employees reported wages to IRS after W-2's have been issued?
A. W-2 Misc
B. Resend W-2 with correct information
C. W-4C
D. W-2 Revised
E. W-2C
70: Which form is needed for independent contractors or vendors who are seeking payment for their products/services?
A. W-2
B. W-9
C. W-4
D. 1099
E. I-9
71: What is the current employer tax rate for FICA social security and medicare?
A. 4.2
B. 5.2%
C. 7.65%
D. 1.45
72: How long should an employer retain payroll information?
A. Three years.
B. Fifty years.
C. Ten years.
D. Five years.
73: How long should a W-4 be kept on file?
A. Five years.
B. Two years.
C. Twelve years.
D. Ten years.
74: A non-exempt employee worked 48 hours one week which included a holiday and 46 hours the next week. How much OT pay is due to this employee?
A. Only 6 hours OT
B. None of the answers are correct
C. None. The employee is non-exempt
D. 8 hours of OT
E. 14 hours of OT
75: A non-exempt employee works 38 hours one week and 46 hours the next week. How many hours should this employee be paid for two weeks if guaranteed 40 hours?
A. The employee should be paid 78 regular hours and 6 overtime hours.
B. The employee should be paid 80 regular hours.
C. The employee should be paid 86 hours. 78 reg hours, 2 guarantee hours and 6 OT hours.
D. The employee should be paid 78 regular hours. No overtime
E. none of the answers are correct
76: If an employee's gross wages are $10,000, federal withholding is $1,000 and the employee wages YTD is $112,000, how much more tax money should be taken from employee's check?
A. $520.00
B. $145.00
C. $765.00
D. $0.00
E. $565.00
77: What is the current maximum SS taxable wage amount for 2012?
A. $102,400
B. $200,000
C. $106,800
D. There is no maximum taxable wage for SS
E. $110,100
78: Where is a student's EIN generally registered?
A. EIS
B. ACC
C. SEC
D. PAWS
79: Where do you look to find payroll withholding deductions based on employee elected filing status?
A. Dept of Revenue Services
B. Circular E for that year
C. Your state's Dept of Labor Tax Rate Schedule
D. IRS Tax Table
80: What is the current 2012 FICA SS rate for employees?
A. 4.2%
B. 7.65%
C. 1.45%
D. 6.2%
E. Not enough information
81: If an employer
A. $1
B. $100
C. $0
D. $10
E. Not enough information
82: A company must send W2 forms every year to its employees by _____________.
A. January 31
B. February 28
C. June 30
D. September 30
83: The term "guaranteed wage" refers to ______________.
A. regular per-hour wages
B. overtime pay beyond 60 hours per week
C. a payroll deduction
D. an agreement to pay an employee a set amount, regardless of hours worked
E. A law that states employees can be given raises only once per year
84: The term "escheat law" refers to ____________.
A. a law that states employees must be paid twice per month
B. a law that requires employers to hold un-cashed payroll checks for a certain amount of time
C. A law that states employees cannot be over the age of 65
D. A law that states employees can be given raises only once per year
85: Which of the following journal entries would be made to void a payroll check printed in error?
A. Dr: Salary Payable, Cr: Salary Expense
B. Dr: Salary Expense, Cr: Cash
C. Dr: Cash, Cr: Salary Payable
D. Dr: Cash, Cr: Salary Expense
86: What is Form W3?
A. A detailed version of Form W2
B. An annual tax filing form for private corporations
C. A form filed with the Social Security Administration summarizing all employee W2s
D. The same as Form 941
87: The Fair Labor Standards Act of 1938 __________________.
A. established equal employment laws for women and children
B. abolished slave labor
C. Set standard wages for hours worked
D. Set the minimum wage at $8 per hour
88: Which of the following is a major payroll processor?
A. ADP
B. IRS
C. FASB
D. SEC
89: The term "incentive payment plan" refers to _______________.
A. regular wage payments
B. a compensation plan based on company performance
C. another name for termination pay
D. a compensation plan in which employees earn more when they reach certain goals
90: The term "cumulative method of withholding" refers to ______________.
A. the calculation of minimum wage rates
B. a federal income tax withholding method that applies a formula with both fixed and variable components to the wage amounts
C. a federal income tax withholding method that takes into account gross earnings, payroll period, marital status, and number of withholding allowances
D. A federal income tax withholding method in which the current withholding amount is determined by cumulative wages and the amount that has already been withheld
91: A company must file Form W3 every year by _____________.
A. January 31
B. September 30
C. February 28
D. December 31
92: The term "statutory employee" refers to ______________.
A. another name for an independent contractor
B. a regular, full-time employee subject to tax withholdings
C. a part-time employee
D. the president of a company
93: The term "payroll period" refers to ____________.
A. a calendar year
B. one month
C. the frequency of employee compensation
D. two weeks
94: On which of the following financial statements is Payroll Expense reported?
A. Statement of Retained Earnings
B. Income Statement
C. Balance Sheet
D. Cash Flow Statement
95: What is an EIN?
A. Employee Identification Name
B. Employer Identification Number
C. Every Independent Numerator
D. Employer Identification Name
96: What is the purpose of a time card?
A. To track employee hours worked per payroll period
B. To calculate employee tax withholding
C. To calculate bonuses
D. To determine employee tax exemptions
97: What is the purpose of Form 940?
A. To report annual wages to employees
B. To report annual wages to the IRS
C. To reconcile taxes paid with tax liability for unemployment taxes
D. To reconcile taxes paid with tax liability for federal taxes
98: The term "withholding allowance" refers to ______________.
A. the extra amount held for the employee in a savings account
B. the additional tax obligation of the employee
C. the additional tax obligation of the employer
D. an allowance that reduces taxable income by a fixed amount
99: For an employee, which of the following is a benefit of using direct deposit?
A. Eliminates the need for the employee to reconcile bank accounts
B. Allows employee to commit fraud more easily
C. No direct benefit to employee
D. Eliminates the need for the employee to go to the bank to deposit a check, since pay is deposited directly in the bank, often the day before payday
100: For an employer, which of the following is a disadvantage of using direct deposit?
A. Builds goodwill with employees
B. Immediately reduces available cash because everyone is paid on payday without having to wait for checks to clear
C. Increases employee opportunity for fraud
D. Saves the company time and money
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