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American Planning Association
CPP-Remote
Certified Payroll Professional Questions and Answers

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Viewing questions 11-20 out of questions

Questions # 11:

An election worker not covered by a Section 218 agreement earned $2,200.00 during the year. The mandatory reporting on Form W-2 is:

Options:

Box 1 only

Boxes 1, 3, and 5

Boxes 1, 2, 3, 5, and 7

Boxes 1, 2, 3, 4, 5, and 6

Answer

Explanation

Comprehensive and Detailed in Depth Explanation:

Under IRS guidelines,election workerswho arenot covered under a Section 218 agreementand who earn less than$2,200 in 2023arenot subject to Social Security or Medicare (FICA) taxes.

However, once the election worker earnsmore than $2,200in a year,only Federal Income Tax withholding applies,not FICA, if the worker is not covered under the Section 218 Agreement.

Thus,only Box 1 (wages, tips, other compensation)is required for W-2 reporting.Boxes 3 and 5 (Social Security and Medicare wages)andBoxes 4 and 6 (FICA taxes)are not required.

✅Correct answer:A – Box 1 only

[References:, IRS Publication 963 – Federal-State Reference Guide, APA Payroll Source – Government Employees and Election Workers Section, ]

Questions # 12:

When completing Form W-2, allocated tips would be included in:

Options:

Box 1

Box 3

Box 7

Box 8

Answer

Explanation

Comprehensive and Detailed In-Depth Explanation:

Allocated tipsare tips assigned to employees by the employer (usually in large food/beverage establishments) when reported tips are below a certain percentage of sales. These are reportedin Box 8of theForm W-2andnot included in Box 1 wagesbecause they're not subject to withholding unless actually received.

Box 1– Wages, tips, compensation

Box 3– Social Security wages

Box 7– Social Security tips

Box 8–Allocated tips

[References:, The Payroll Source, Chapter 3: Reporting Requirements, IRS General Instructions for Forms W-2 and W-3, ]

Questions # 13:

A credit balance in a federal income tax payable account means the amount:

Options:

Was overwithheld

Was underwithheld

Has not yet been paid

Needs to be reclassified to the payroll expense account

Answer

Explanation

Comprehensive and Detailed In-Depth Explanation:

Acredit balancein thetax payableaccount indicates the company has withheld taxes buthas not yet remitted them to the government, hence showing as a liability.

[References:, The Payroll Source, Chapter 4: Payroll Accounting, ]

Questions # 14:

When a federal tax levy is in place for an employee, the amount of the employee’s wages that must be remitted to satisfy the levy is the amount remaining after the exempt amount has been subtracted from the employee's:

Options:

gross pay

disposable pay

take-home pay

federal taxable pay

Answer

Explanation

Comprehensive and Detailed in-Depth Explanation:

Disposable pay= gross wages minus mandatory deductions (FIT, FICA, SIT). A federal tax levy is appliedafter subtracting the exempt amountfromdisposable pay.

Not based on gross or federal taxable pay.

IRS Publication 1494 provides exemption tables.

[References:, IRS Pub 1494, The Payroll Source, Chapter 9: Wage Attachments, ]

Questions # 15:

When implementing a payroll system update, it is important to perform all EXCEPT:

Options:

Verifying system security

Updating company policies

Verifying control procedures

Updating system documentation

Answer

Explanation

Company policiesdon't necessarily need updating when a system is updated. However, verifying controls, documentation, and security is critical to maintaining compliance and accuracy.

Questions # 16:

All of the following validations should be performed each pay period before finalizing the payroll register EXCEPT:

Options:

Review negative deductions

Identify zero dollar net pay

Compare batch totals

Confirm ACH file

Answer

Explanation

Comprehensive and Detailed In-Depth Explanation:

Before finalizing a payroll register, validations ensure accuracy:

Check for negative or unusual values

Identify $0 net pay(can be a red flag)

Compare batch totalsto prevent imbalance

ACH confirmationis part of thepost-processing transmission phase, not the validation of the payroll register itself.

[References:, The Payroll Source, Chapter 5: Payroll Processing, ]

Questions # 17:

The process of planning an implementation project consists of all the following activities EXCEPT:

Options:

Evaluating costs

Conducting user training

Defining goals and objectives

Analyzing available resources

Answer

Explanation

Projectplanningis the initial phase in a system implementation lifecycle. During this phase, the following tasks are performed:

Evaluating costs: Estimating the budget required for the new system.

Defining goals and objectives: Establishing the project’s scope and purpose.

Analyzing available resources: Reviewing available human, technical, and financial resources.

Conducting user trainingoccurs later, during theexecution or implementation phase,not during planning. Training prepares end-users once the system is configured or ready to be used, not when planning is being scoped.

[Reference:, The Payroll Source®, Chapter 7: Payroll System Implementation, APA’s CPP Exam Study Guide – Project Management and Planning, ]

Questions # 18:

All of the following components must be maintained in the employee master data file EXCEPT:

Options:

service date

work location

job classification

dependent’s name

Answer

Explanation

Comprehensive and Detailed in-Depth Explanation:

Theemployee master fileincludes data relevant to employment, tax, and payroll purposes — likeservice date,job role, andlocation. However,dependent namesarenot required, unless benefits administration is integrated.

[References:, The Payroll Source, Chapter 5: Payroll Systems, ]

Questions # 19:

All of the following withholding methods use the Tentative Withholding Amount in the calculation of federal income tax withholding EXCEPT:

Options:

aggregate.

percentage.

wage bracket.

mandatory flat rate.

Answer

Explanation

Comprehensive and Detailed in-Depth Explanation:

The Tentative Withholding Amount is a calculated figure used in certain methods to determine the appropriate amount of federal income tax to withhold from an employee's wages. The aggregate, percentage, and wage bracket methods all utilize this concept. However, the mandatory flat rate method applies a fixed percentage (currently 22%) to supplemental wages without considering a tentative withholding amount. Therefore, the correct answer is D. mandatory flat rate.

[References:, The Payroll Source, Chapter 3: Taxable and Nontaxable Compensation]

Questions # 20:

All of the following information is required to be reported on Form 1094-C EXCEPT: