1
Q
What are the two tests to determine if the person is an employee or independent contractor?
A
- Common Test (control)
2. Reasonable Test
2
Q
Who are Statutory Employees?
A
(HALT)
- Homemakers (workers who go to plant to pickup parts and bring back a finished product)
- Agent Commission Drivers
- Life Insurance Sales
- Traveling Sales People
3
Q
Who are Statutory Non-Employees?
A
(REDS)
- Qualified Real Estate Agents
- Direct Sellers
(Not True Employees - 1099’s)
4
Q
What does the FLSA stand for?
A
Fair Labor Standards Act
5
Q
FLSA governs?
A
- Minimum Wage
- Child Labor
- Overtime
- Equal Pay for Equal Work(EPA)
- Record Keeping
- All Hours WORKED in excess of 40 in a workweek
6
Q
FLSA doesn’t govern?
A
- Paid Time Off
- How often you get paid
- If you pay cash, check, direct deposit (They don’t care)
- Pay frequency
7
Q
What is the Federal Minimum wage for 2018?
A
$7.25
8
Q
What is not covered by the FLSA?
A
- Hospitals
- Nursing Homes
- Schools (Higher and Lower Education Levels)
- Public Agencies
- Mom and Pop Stores
- Business owned by one family and only family members work in the business.
9
Q
What is the tip credit for 2018?
A
$5.12
10
Q
Who is allowed to use 14 day cycles with an 8/80 rule?
A
Hospitals/ Nursing Homes
The FLSA contains an exemption to the workweek standard for hospitals and nursing homes that is designed to give them more flexibility in scheduling. The law allows such employers to use a 14 day period, rather than a workweek, for determining overtime compensation.
11
Q
How is overtime calculated for hospitals/nursing homes?
A
Overtime is calculated for hours worked greater than 8 hours in a day or 80 hours in a 14 day cycle.
12
Q
Police Officers can accrue how many hours of comp time?
A
240 hours (that is 160 hours of OT worked). After that, they must be paid OT with their regular pay.
13
Q
What does FIT stand for?
A
Federal Income Tax
14
Q
What does FITW stand for?
A
Federal Income Tax Withholding
15
Q
What is the parking allowance per month in 2018?
A
$260 per month
16
Q
What is the transit pass allowance per month in 2018?
A
$260 per month.
17
Q
How much is the adoption assistance limit for 2018?
A
$13,810.00
18
Q
What does ISO stand for?
A
Incentive Stock Options (taxable when sold)
19
Q
What does NSO stand for?
A
Non Qualified Stock Options
20
Q
What Form do you report tips on?
A
Form 4070
21
Q
What does MSA stand for?
A
Medical Savings Accounts
For small companies - No more than 50 employees
22
Q
What does HRA stand for?
A
Health Reimbursement Agreement
(The employer reimbursed the employee directly for qualified medical expenses.). Funded solely by employer.
23
Q
What does HSA stand for?
A
Health Savings Account
Employee and employer make contributions.
24
Q
What does FMLA stand for?
A
Family Medical Leave Act
(You must have worked for the company for 12 months to be eligible. You must have worked at least 1250 hours in the proceeding calendar year.)
25
What does NACHA stand for?
National Automated Clearing House Association
26
What does ODFI stand for?
Originating Depository Financial Institution (company bank)
27
What does ACH stand for?
Automated Clearing House (Federal Reserve)
28
What does RDFI stand for?
Receiving Depository Financial Institution (employee’s bank)
29
What are the two main bodies we report to?
1. DOL (Department of Labor- the FLSA folks)
| 2. IRS
30
What is the FUTA rate for 2018?
6.0% on the first $7,000 of wages
| You can get a credit of 5.4% if you pay your SUTA in full and on time. Giving you a rate of .6%
31
What are the 3 “P’s” of payroll management?
1. Process
2. People
3. Proficiency
32
What are the four Basic Leadership styles?
1. Supporting (low task/high relationship)
2. Coaching (high task/high relationship)
3. Delegating (low task/low relationship)
4. Directing (high task/low relationship)
33
What is a supporting leadership style?
Little control sought by the manager with a good deal of mutual trust and support.
34
What is a coaching leadership style?
Manager controls the job and procedures, also relies on personal communication with employees to coach them in preforming the job.
35
What is a delegating leadership style?
Most jobs delegated to staff; little personal contact desired by manager.
36
What is a directing leadership style?
Manager seeks to comfort staff and direct performance but with little feedback or dialogue with employees.
37
What is the social security rate for 2018?
6.2%
$128,400 for 2018
38
What is the Medicare rate for 2018?
1.45%
Over $200,000 then 2.35%
39
What is the definition of a balance sheet?
Reports the company’s financial condition at the end of an accounting period by reporting the asset, liability, and equity.
40
What is the definition of an income statement?
Shows the company’s net income or loss for an accounting period.
41
What is Kotter’s Management style?
(POCO)
1. Planning
2. Organizing
3. Controlling
4. Order
42
What is “X” Theory?
People are basically unmotivated, don’t like to work or accept responsibility and require close supervision.
43
What is “Y” Theory?
People enjoy work, seek challenges, accept responsibility and work well if rewarded.
44
What is “Z” Theory?
Stresses decision by group consensus. Achievement of the group not the individual. Favored by Japanese Management.
45
Formula to calculate overtime for an hourly employee.
Total pay for workweek divided by total hours worked = regular rate of pay. Regular rate of pay * .5 * overtime hours = overtime pay
46
What form does an employee use to report tips received to their employer?
Form 1040
47
Maximum excludable amount for Education Assistants
$5,250 per year
48
What is the maximum dependent care assistance?
$5,000 per year, $2,500 for married employees filing separate returns.
49
Define an excess parachute payment.
If a payment equals or exceeds 3 times the average annual compensation of the recipient over the previous 5 year period it’s a parachute payment. The entire amount that exceeds the 5 year average is the excess.
50
Is paid on-call hours counted as hours worked towards overtime?
Yes
51
Release from levy form number?
668-D
52
What is the best method for verifying you grossed up wages correctly?
Using the gross up amount, calculate the required withholdings and net pay.
53
What does QACA stand for?
Qualified Automatic Contribution Arrangements
54
Who must the employers notify in writing regarding the EIC?
Employees who have no federal income tax withheld
55
Act that allows federal government agencies to garish wages for no tax debt?
Debt Collection Improvement Act of 1996
56
What is the 401(K), 403(B), and 457 limits for 2018?
$18,500
With a catch up of $6,000, if you are 50 or over.
57
What is the tax deposit deadline for a monthly depositor?
15th of the following month.
58
What does FICA stand for?
Federal Insurance Contributions Act
59
What does SEP stand for?
Simplified Employee Pension
60
Define supplemental wages
Any wages paid in addition to an employee’s regular wages.
61
What does CCPA stand for?
Consumer Credit Protection Act
62
What is the tax deadline for a semi-weekly depositor?
If payday is Wednesday, Thursday, or Friday then pay it the following Wednesday.
If payday is Saturday, Sunday, Monday, or Tuesday then pay it Friday.
63
Define a non qualified deferred compensation plan.
A plan that may discriminate in favor of highly compensated employees, officers, or shareholders.
64
When making pension or annuity payments, how should you withhold if no Form W-4P has been submitted?
Married, 3 allowances
65
What does HDHP stand for?
High Deductible Health Plan
66
Maximum withholding allowed for a child support order.
50% of disposable pay, if employee has a second family, 55% if in arrears with a second family, 60% if employee doesn’t have a second family, 65% if the employee without a second family is in arrears.
67
3 tests to determine if an employer is subject to FUTA.
1. General Test
2. Household Test
3. Farmworkers Test
68
If a semi-weekly deposit period crosses quarters, what extra step does an employer need to make?
Make separate deposits for each quarter’s tax liability.
69
What is the retirement plan for employees of state, counties, and cities called?
457(B)
70
What box and code on the W-2 is the Employer HSA contributions reported?
Box 12 code W
71
An external audit provides?
An assessment of the financial statements.
72
Owner’s Equity Equals?
Subtract liabilities(current and long term) from assets (current, property, and intangibles)
73
Journal is?
First posting of data about a transaction.
74
The Income Statement is?
Shows the company’s net income or loss for an accounting period.
75
Financial Statements are?
Are the balance sheet, income statement, cash flow statement of footnotes, and the report of the independent auditor.
76
Cash Flow Statement?
Reports the change in the organization’s cash from one accounting period to the next period by showing the cash inflows and outflows.
77
There are two types of credit against FUTA liability. What are they?
1. 90%
| 2. The normal credit of 5.4%
78
What are the two main bodies we report too?
1. DOL (Department of Labor)
| 2. IRS
79
SSA has not issued SSN’s with these numbers, so they are not valid?
SSN beginning with 9
SSN with the number 666 or 000 in positions 1-3.
SSN with the number 00 in positions 4-5
SSN with the number 0000 in positions 6-9
SSN with the number 123-45-6789
80
What is the percentage amount for gross up method for 2018?
22% for federal wages
Wages that exceed $1,000,000 the rate is 37%
81
If a vendor does not supply you with a valid TIN, what can you do?
You can withhold 24% FIT as backup withholding.
82
What is another acronym for Social Security Tax?
OASDI - Old Age and Survivors Disability Insurance
83
What is another acronym for Medicare Insurance?
HI - Health Insurance
84
What is a Common Paymaster?
When an employee works for two different related companies CONCURRENTLY, meaning at the same time, only one company has to pay Social Security taxes.
85
Wages exempt from social security and Medicare?
1. Students working for the school they attend.
2. Children working for parents.
3. Non resident aliens on F, J, M, or Q Visas.
86
What form do you use to apply for an EIN?
SS-4
87
Can you combine liabilities that cross a quarter?
No. NEVER EVER!!!
88
What are the penalties for late filling for tax liabilities?
1. 2% - of the under deposited tax if deposited within 5 days of due date.
2. 5% - of the under deposited tax if deposited more than 5 days, but within 15 days.
3. 10% - of the under deposited tax if greater than 15 days.
4. 15% - of under deposited tax if a notice is received from IRS and you didn’t deposit within 10 days of the notice.
89
What annual form do agricultural employers submit to the IRS?
943
90
What annual form do small businesses with only $1,000 in liability file with the IRS?
944
91
What annual form is used when you have no wage withholding?
945
92
What are the penalties for not filing W-2’s?
$50 per form for failure to file or correct a W-2 within 30 days of due date.
$100 per form for failure to file or correct more than 30 days but before Aug 1st.
$270 per form for failure to file or correct more than 30 days from due date and not before Aug 1st.
93
Disposable Pay =
Gross Wages - Taxes
94
Assets have a natural balance of? Credit or Debit?
Debit
95
Expenses have a natural balance of? Credit or Debit?
Debit
96
Liabilities have a natural balance of? Credit or Debit?
Credit
97
What are the two types of liabilities?
1. Short Term - paid out in less than 1 year.
| 2. Long Term - paid out more than 1 year.
98
Outsourcing Advantages?
1. Low fixed costs
2. No extra rooms of big hardware
3. Training and support
99
Outsourcing Disadvantages?
1. Lack of control over security
2. Responsibility for filing and deposit errors
3. Possible high variable costs
4. No control over breakdowns
100
In House System Advantages?
1. Control of system
2. Convenient access
3. System security
4. Scheduling flexibility
101
In House Systems Disadvantages?
1. Sufficient secure space for the hardware
2. High fixed costs
3. Additional staffing
102
Steven Covey developed principle centered leadership, which is?
Security
Guidance
Wisdom
Power
103
What is the Empowerment Process?
1. Establish the desired goal
2. Provide guidance
3. Identify resources available to accomplish the tasks
4. Hold people accountable
5. Identify consequences
104
What is one thing you can’t delegate?
Accountability
105
What are the stages of team development?
Forming - start up stage
Storming - brainstorming, communication
Norming - folks getting used to one another
Performing - getting the job done
106
Which management style follows the Golden Rule, “Do unto others as you would have them do unto you?”
Convey’s principle-centered leadership management style
107
Can nonresident aliens fill out a W-4 fill out like US Citizen?
No, they must follow special instructions. They put single and 1 allowance and normally write NRA on the W-4.
108
Child Labor for Minors age 14 and 15 are?
Minors that are 14 and 15 can work in a limited number of no hazardous jobs I retails, food service, and gasoline service establishments. They cannot work during school hours and are limited to working 3 hours a day and 18 hours a week when school is in session (8 hours a day and 40 hours per week when school is not in session). They also can work only between 7am - 7pm (expanded to between 7am - 9pm from June 1 through Labor Day).
109
Child Labor for Minors under age 14 are?
Employment is generally prohibited, unless the minor is working for a parent, and even those jobs cannot be hazardous or in mining or manufacturing.
110
Walsh-Healey Public Contracts Act governs?
The wages and hours of employees of manufacturers and dealers furnishing the federal government with materials, supplies, and equipment under contracts exceeding $10,000.
111
Davis-Bacon Act:
The Secretary of Labor sets prevailing minimum wage standards for laborers and mechanics working on federally financed construction contracts for $2,000 or more. The prevailing wages are based on wages for similar workers in the locality where the project is to take place.
112
Contract Work Hours and Safety Standards Act:
Requires contractors with the federal government (those not already covered by Walsh-Healey or Davis-Bacon) to pay employees overtime of at least 1 1/2 time’s their base rate for hours worked over 40 in a workweek.
113
McNamara-O’Hara Service Contract Act:
Applies to employers that contract with the federal government to provide services to a federal agency. It applies to contracts over $2,500 and requires that employees be paid prevailing minimum wages and fringe benefits based on the wages and benefits for similar employment in the locality or under a collective bargaining agreement (the Secretary of Labor decides), not no less than the minimum wage under the FLSA.
114
What is the form that you use to file for a Social Security Card?
SS-5
115
According to Kotter, what characterizes leadership?
Direction, Alignment, Motivation, Change
116
A Balance Sheet is?
Provides a look at the company’s financial condition at a specific point in time by listing its assets, liabilities, and equity.
117
What is the purpose of internal controls?
The purposes of an organization’s internal controls are to safeguard the organization’s assets and to ensure that the financial statements are not materially misstated.
118
What is the SOX (Sarbanes-Oxley) Act?
The SOX Act was enacted in 2002 in the wake of corporate finance scandals at publicly traded companies.
SOX sets up the framework for the establishment of the Public Company Accounting Oversight Board and imposes requirements on public confidence in corporate financial management.
In general, SOX requires public companies to have a framework for identifying, documenting, and evaluating their internal controls over financial reporting, and it provides a logical way to analyze a company’s control system. SOX also prohibits a public accounting firm from providing both external auditing and most non-auditing services to the same client, and it requires audit partners to rotate every five years.
119
What are the Basic Management Skills?
1. Planning/Organizing
2. Staffing
3. Directing
4. Controlling
5. Reporting
120
Payroll Staff Skills include:
1. Hiring
2. Training
3. Delegating
4. Coaching
121
For a non qualified deferred compensation plan to exclude deferrals from income, distributions can be allowed when?
At a specified time when the deferral was made.
122
In addition to the FLSA, the following laws regulate minimum wages and overtime pay to employees working for employers who are federal government contractors:
The Davis-Bacon Act
The McNamara-O’Hara Act
The Contract Work Hours and Safety Standards Act
Copeland Anti-Kickback Act
Walsh-Healey Public Contracts Act
123
Paper Forms 1095-C are filed by ALEs with the IRS reporting full-time employees no later than:
February 28
124
An individual with a supportive communication style is described as one who:
Is the most interested in how an idea will affect other people.
125
A cafeteria plan maybe funded by any of the following:
Flex dollars or flex credits
Salary reduction
After-tax employee contributions
126
All of the following benefits are taxable fringe benefits:
Severance Pay
Cash Payments
Back-pay
Third-party sick pay relative to the employer’s contribution
127
An employee drove a company vehicle 5,000 miles for business and 6,000 miles for personal use. The car is valued at $27,500.00. What is true regarding the employee’s use of the vehicle?
Employer’s are required to report the value of the personal use of the vehicle at least once a year.
128
Under the FLSA’s white collar exemptions rule, an exempt professional employee must meet all of the following requirements:
Prolonged study
Consistently exercise discretion and judgement
Being paid a weekly salary of at least $455
129
FLSA requires what documents to be retained for at least three years?
Employee’s straight time and overtime
Collective bargaining agreements
130
The minimum salary requirement does not apply to exempt professional employees who are:
Attorneys
Physicians
Teachers
131
A discretionary bonus is?
Payment for attendance, quality, or a production
132
The management trait that best fits the empowerment management style is?
Provides guidance, identify resources, and accountability.
133
An individual with a assertive communication style is described as one who:
Prefers facts that have been verified in experience.
134
An individual with a expressive communication style is described as one who:
Is interested in possibilities first, and then facts.
135
An individual with a introspective communication style is described as one who:
Prefers points to be arranged in logical, beginning-to-end sequences.
136
What is the definition of a Journal?
It is a chronological record of the daily transactions of a business.
137
What is the definition of a Chart of Accounts?
It lists each account by a name and an identification number.
138
A health care flexible spending account may allow a $500 carryover if?
The plan does not have a grace period.
139
What form is used by a local government employer when withholding only Medicare taxes?
Form 941
140
Form 1042-S must be provided to the recipient by?
March 15th
141
The EEO-1 report includes?
The amount from Form W-2, Box 1 in the wage bands
142
Form 843 is used to file abatement for all of the following:
1. Assessed Taxes
2. Assessed Penalties
3. Additions to tax due
143
When reporting the cost of employer provided health coverage on Form W-2, all of the following methods can be used for calculations the amount:
1. Modified COBRA premium method
2. COBRA applicable premium method
3. Premium Charged Method
144
Nonqualified stock options are subject to federal Income Tax withholding when:
Under the IRC, I come, social security, and Medicare taxes are withheld when the employee exercises (purchase the stock) at the discounted price
145
What does the Schedule B of the 941 record?
It records the daily record of daily liabilities within a quarter, not the deposits.
146
The FLSA exempts the following types of pay from the regular rate of pay?
No cash compensation, gifts, paid time off, reimbursed expenses, discretionary bonuses, benefit plan contributions, stock options and others.
147
The principle of constructive receipt determines?
When wages are taxable based on when the employee is actually or constructively paid.
148
What is imputed income?
Is the taxable value of non cash benefits the employee receives, such as taxable group-term life insurance. Imputing income reduces employees’ net pay by increasing taxes. The employee does not receive additional pay in the form of cash.
149
An employee whose wages are subject to a federal levy wants to increase the amount of the credit union deduction from $50 to $75. What is true with the levy?
An increase initiated by the employer for a deduction is subtracted from the amount exempt from the levy when calculating net pay.
150
Which tax ALWAYS impacts an employee’s net pay?
State income tax is withheld from an employee’s paycheck, so it impacts net pay.
151
What percentage do you use if you opt to have your 401k balance paid out to you after terminating your employment?
20%
CPP Exam Prep 2018
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