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- (Topic 2)
When testing a payroll business continuity plan, all of the following tasks are critical to issuing payments to employees EXCEPT:
Correct Answer:B
A payroll business continuity plan (BCP) is designed to ensure payroll processes continue during a disruption. Critical tasks include validating system access, creating ACH files, and printing paychecks.Adding a new cost center is NOT criticalto issuing payroll, as it primarily affects financial reporting rather than payment processing.Payroll.orgrecommends focusing on system access, banking functions, and ensuring payroll runs smoothly.
References:
✑ Payroll.org, Business Continuity and Disaster Recovery Guidelines
✑ IRS Publication 15 (Employer??s Tax Guide)
- (Topic 2)
Which of the following deductions from pay is considered a voluntary deduction?
Correct Answer:B
✑ Wage assignmentsare voluntary deductions authorized by employees for things likeloan payments or union dues.
✑ Garnishments, wage attachments, and medical support ordersarecourt-mandated
deductions, making them involuntary. References:
✑ IRS Publication 15 (Employer??s Tax Guide)
✑ Payroll Deduction Compliance Guide (Payroll.org)
- (Topic 1)
Which of the following general ledger accounts should normally maintain a credit balance?
Correct Answer:A
Comprehensive and Detailed Explanation:Acredit balancemeans an accountnormally holds a liability or revenue amount.
✑ Accounts Payable (Option A)representsamounts owedto vendors, which is
aliability accountandnormally has a credit balance.
✑ Option B (Cash)is incorrect because cash is anasset accountandtypically has a debit balance.
✑ Option C (Office Equipment)is incorrect because it is afixed assetand alsohas a debit balance.
✑ Option D (Prepaid Expenses)is incorrect because prepaid expenses areassetsthat aredebited when paid.
Reference:
GAAP Accounting Principles – Chart of Accounts
Payroll.org – Payroll Accounting Fundamentals
- (Topic 1)
Using the following information from a payroll register, calculate the tax deposit liability for the payroll.
Correct Answer:A
Comprehensive and Detailed Explanation:Thetax deposit liabilityincludesfederal income tax withholding (FITW), Social Security tax, and Medicare tax.
✑ Social Security Tax:
✑ Medicare Tax:
✑ Total Tax Deposit Liability: Thus, the correct answer isA. $7,975.00. Reference:
IRS Publication 15 – Employer's Tax Guide Payroll.org – Payroll Tax Calculation Best Practices
- (Topic 2)
An employee receives $1,600.00 biweekly from their employer. Using the following information, calculate the total amount of voluntary deductions.
Correct Answer:B
Voluntary deductions include:
✑ 401(k):$160.00
✑ Medical insurance:$85.00
✑ Dental insurance:$15.00
Total voluntary deductions:$160 + $85 + $15 =$260.00
Federal income tax, Social Security, Medicare, and tax levies are mandatory deductions, so they are NOT included in voluntary deductions.
References:
✑ IRS Publication 15 (Circular E)
✑ Payroll Source®, Payroll.org