FPC-Remote Free Practice Test

- (Topic 1)
Payroll standard operating procedures should be updated no less frequently than:

1. A. Annually
2. B. Quarterly
3. C. When revising workflow
4. D. When management changes

Correct Answer: C
Comprehensive and Detailed Explanation:PayrollStandard Operating Procedures (SOPs)must beregularly updatedto maintain compliance and accuracy.
✑ Best practice is to update SOPs whenever workflows change(Option C).
✑ Option A (Annually)is incorrect becausewaiting a full yearcould lead to outdated procedures.
✑ Option B (Quarterly)is incorrect unless payroll processes are highly dynamic.
✑ Option D (When management changes)is incorrect becauseprocesses may change independently of leadership changes.
Reference:
Payroll.org – Payroll Policies and Procedures Best Practices IRS – Payroll Compliance Guidelines

- (Topic 2)
Using the wage bracket method, calculate the employee??s net pay. The employee??s W-4 was completed in 2019 or earlier.

1. A. $589.70
2. B. $651.45
3. C. $685.45
4. D. $686.45

Correct Answer: B
✑ Gross pay:$15 ?? 40 = $600.00
✑ 401(k) deduction:$50.00(Pre-tax)
✑ FITW, Social Security (6.2%), Medicare (1.45%)applied
✑ Using the IRS Wage Bracket Method, net pay is $651.45 References:
✑ IRS Publication 15-T (Federal Income Tax Withholding Tables)

- (Topic 1)
All of the following objectives are included in the operations of a Payroll DepartmentEXCEPT:

1. A. Accurate tax reporting
2. B. Cost savings
3. C. Giving tax advice
4. D. Reporting to management

Correct Answer: C
Comprehensive and Detailed Explanation:ThePayroll Department??s key functionsinclude:
✑ Tax reporting (Option A)– Payroll ensures accurateIRS and state tax reporting.
✑ Cost savings (Option B)– Payroll manages efficiency, compliance, and automation toreduce costs.
✑ Reporting to management (Option D)– Payroll provides financial reports and insights tocompany leadership.
However,giving tax advice (Option C) is NOT a function of payroll. Payroll professionalscalculate and withhold taxesbut do notprovide tax planning adviceto employees.
Reference:
Payroll.org – Payroll Department Responsibilities IRS – Employer??s Responsibilities for Payroll Taxes

- (Topic 1)
An exempt employee is being paid an annual discretionary bonus. The employee has submitted a 2020 W-4. Calculate the net pay based on the following information:

1. A. $3,117.50
2. B. $3,267.50
3. C. $3,603.40
4. D. $3,932.83

Correct Answer: B
Comprehensive and Detailed Explanation:Using theIRS Supplemental Wage Method, theflat tax rateof22%applies tobonuses:
✑ Federal Income Tax:
✑ Social Security Tax:
✑ Medicare Tax:
✑ State Income Tax: Total Taxes Withheld:

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- (Topic 2)
The process used to verify and validate payroll system edits or warnings is called:

1. A. Gap analysis.
2. B. Balancing and reconciliation.
3. C. Evaluating system performance.
4. D. Periodic data auditing and sampling.

Correct Answer: B
✑ Balancing and reconciliationensures payroll data isaccurate, consistent, and matches financial records.
✑ Gap analysis(A) is used to compare actual vs. expected performance.
✑ Evaluating system performance(C) focuses on efficiency, not data verification.
✑ Periodic auditing (D)is important but not the primary method of payroll validation. References:
✑ Payroll Balancing & Reconciliation Guidelines (Payroll.org)