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%
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