Test Bank for Payroll Accounting 1st Edition by Landin
Multiple
True - False Questions
Payroll-related legislation often reflects emerging issues in societal evolution.
1.

True

2.

False

The Worker?s Compensation Act of 1935 legislated the payment of worker?s
compensation insurance.
1.

True

2.

False

The Age Discrimination in Employment Act prohibits discrimination in
employment practices for workers who are older than age 50.
1.

True

2.

False

The IRS uses EINs to track employers for tax purposes.
1.

True

2.

False

The Lilly Ledbetter Act of 2009 mandated equal pay for men and women who
perform identical tasks.
1.

True

2.

False


The use of outsourced payroll relieves employers of the responsibility for
payroll accuracy.
1.

True

2.

False


Payroll accounting systems may involve an integrated software package that
contains business planning tools.
1.

True

2.

False

The payroll volume tends to be greater for small companies than for large
businesses.
1.

True

2.

False

The ethical principle of due care pertains to the upholding of rights and
justice of stakeholders.
1.

True

2.

False


Internal payroll reports are used to inform a firm?s managers and decisionmakers about labor costs.
1.

True

2.

False


Multiple Choice Questions - Page 1
What is the effect of payroll-related legislation on payroll practice?
1.

Legislation explicitly dictates the activities of payroll accountants.

2.

Legislation has prescribed the format and delivery of a payroll system.

3.

Legislation has alleviated the need for a company to design its own payroll system.

4.

Legislation highlights the need for firms to create well-designed payroll systems.

Leslie is the accountant for a major movie production. She is approached by a

group of people from the press who ask her questions about the salaries of
the actors and actresses involved in the film. According to the AICPA Code of
Ethics, which principle most closely governs the appropriate conduct in this
situation?
1.

Responsibilities

2.

Due Care

3.

Integrity

4.

Public Interest

The Sarbanes-Oxley Act legislated penalties for violations of which Act?
1.

HIPAA

2.

ERISA

3.


PRWOR

4.

DOMA


Which of the following is among the guidelines for the AICPA Code of Ethics?
1.

Company Interest

2.

Corporate Responsibility

3.

Due Care

4.

Interdependence

Which of the following is not payroll-related issue that is specific to large
companies?
1.

Geographic dispersion.


2.

Multiple departments.

3.

Homogeneous workforce.

4.

Increased task variation.

The U.S. v. Windsor case repealed an Act and affected payroll tax
withholdings for certain employees. Which Act did Windsor repeal?
1.

OSHA

2.

ARRA

3.

ATRA

4.

DOMA



Peter is the owner of a fast-food franchise. When his payroll accountant quit,
he hired his wife, Karen, to take over the payroll responsibilities. Peter prefers
to review the payroll records prior to disbursement and often asks Karen to
add or subtract amount from employee pay. Which ethical principle most
closely describes Peter and Karen’s unethical actions?
1.

Objectivity and Independence

2.

Integrity

3.

Public Interest

4.

Responsibilities

The payroll accountant for Candor, Inc. was found to have issued payroll
checks in the name of several terminated employees. Upon investigation, the
checks were all deposited to the same bank account, which was owned by the
payroll accountant. Which ethical principle did the payroll accountant violate?
1.

Responsibilities


2.

Public Interest

3.

Objectivity and Independence

4.

Integrity

The Fair Labor Standards Act contains provisions for:
1.

Overtime pay, minimum wage, and working conditions.

2.

Full-time workers, part-time workers, and independent contractors.

3.

Minimum wage, maximum age, and overtime pay.

4.

Pay periods, paid time off, and minimum age.



Jonathan is the payroll accountant for Terrafirm Company. The company has
experienced a rise in business that has increased Jonathan?s workload to
more than double his original amount. Because of the business increase, he
has not been able to engage in the continuing professional education (CPE)
that his payroll certification requires. When asked by his employer, Jonathan
claims to be current with his CPE. According to the AICPA Code of Ethics,
which of the following most closely describes the principle tha
1.

Objectivity

2.

Due Care

3.

Responsibilities

4.

Public Interest

Which of the following is not an option available to payroll accountants?
1.

Payroll preparation through electronic accounting software.

2.


Reduced responsibility for accuracy because of outsourcing services.

3.

Increased use of paycards as a vehicle for paying employees.

4.

Governmentally developed charts to streamline the payroll process.

Which Act governs the minimum wage that must be paid to workers?
1.

FICA

2.

FLSA

3.

FUTA

4.

SSA


Payroll taxes were instituted by the 16th Amendment to the United States

Constitution:
1.

To pay for governmental salaries.

2.

To make money from businesses that had employees.

3.

To fund infrastructure improvements of booming cities.

4.

To penalize people who needed employment.

Within how many days after initially commencing work must an employer
report a new employee, according to PRWOR?
1.

7

2.

10

3.

20


4.

30

The Age Discrimination in Employment Act of 1967 prevented mandatory
retirement for workers over the age of:
1.

55

2.

50

3.

45

4.

40

The Current Tax Payment Act changed employer remittance of taxes by:
1.

Instituting the mandatory transfer of payroll tax liabilities.

2.


Legislating the amounts of tax withheld from each employee.


3.

Requiring employers to remit taxes during the year based on estimated liabilities.

4.

Calling for employers to remit only the current portions of taxes due.

Employment legislation during the Great Depression included which of the
following Acts:
1.

FLSA, FUTA, and FICA

2.

CTPA, Davis-Bacon Act, and FLSA

3.

Walsh-Healey Act, FICA, and ERISA

4.

FUTA, ADA, and FLSA

Which form does the Internal Revenue Service use to keep track of

employers?
1.

SS-4

2.

ES-4

3.

EIN

4.

W-4

Why do different methods of time collection devices (e.g., time cards,
biometric devices) exist among companies?
1.

They replace personnel with computers, which prevents ethical issues.

2.

They maintain precise tracking of employee whereabouts.

3.

They promote compensation accuracy that matches company needs.


4.

They alleviate the need for internal control.


The main purpose of the Federal Insurance Contribution Act (FICA) was to:
1.

Provide health insurance for all employees.

2.

Mandate worker’s compensation insurance for employers.

3.

Provide life insurance for all employees.

4.

Provide benefits for workers who were unable to work because of age, disability, or
death.

Worker’s compensation insurance premiums:
1.

Are the same amount for all employees of a company, regardless of employee task.

2.


Are remitted in full at the end of the year to ensure accuracy.

3.

Are mandated by the Fair Labor Standards Act.

4.

Are governed by state laws and vary according to worker job classification.

Which most closely identifies why it is important for payroll accountants to
adhere to the AICPA Code of Ethics?
1.

To avoid potential underpayments of employee compensation.

2.

To prevent fraud by company officers.

3.

To protect the assets of the company and remit money owed to the government.

4.

To maintain personal and professional standards.

According to FMLA, during the time that an employee is on family leave:

1.

The employer must respect the employee’s privacy by ceasing contact during the
leave.

2.

The employee is responsible for staying in touch with the employer.


3.

The employer may make changes to the employee’s benefits.

4.

The employer is responsible for alerting the employee to changes in processes and
benefits.

Contemporary payroll practices reflect:
1.

The increased use of manual payroll accounting systems.

2.

The decrease in labor costs that reflects the effect of the economic recession.

3.


The strategic use of payroll data as a company planning tool.

4.

The replacement of accounting personnel with computerized systems.

Joel is the payroll accountant for a company. He has been notified of an
impending audit of all accounting records. What is Joe?s role in the audit?
1.

He is required to be absent during the audit to avoid influencing the results.

2.

He must agree to serve on the audit staff for other companies.

3.

He must be available to answer questions and grant access to payroll records.

4.

He must prevent privacy breaches by disallowing access to payroll records.

Which of the following represents a payroll system privacy breach by Susan,
a payroll accountant?
1.

Susan shares information about labor costs with company executives.


2.

Susan alerts department managers about potential FLSA violations in their
departments.

3.

Susan discusses specific information about the company?s federal contracts with
friends during lunch.


4.

Susan places employee payroll files in a cabinet to which only she and her supervisor
have access.

Which of the following is not a payroll accountant’s responsibility?
1.

Discussions of wages and hours with the employee and his or her manager.

2.

Contract negotiations with governmental entities.

3.

Preparation for accounting system audits.

4.


Remittance of all payroll tax deposits.

In the event of an ethical breach by a payroll accountant, which entity is
ultimately liable for any monetary damages due to stakeholders?
1.

The payroll accountant

2.

The company?s CEO or president

3.

The governmental entity associated with company oversight

4.

The entity that issued the license to the accountant

Which Act extended medical benefits for certain terminated employees?
1.

ADEA

2.

COBRA


3.

OSHA

4.

ERISA

The classification of workers as exempt and nonexempt pertains to the
provisions of the:
1.

Social Security Act.


2.

Equal Pay Act.

3.

Fair Labor Standards Act.

4.

Federal insurance Contributions Act.

The purpose of payroll legislation is to:
1.


Increase the complexity involved in compensating employees.

2.

Protect the rights of employees by legislating workplace equity.

3.

Generate increased tax revenue for governmental entities.

4.

Promote governmental involvement in business activities.

Michael is the payroll accountant for a non-profit. In his personal life, he is
also a single father of three young children. On the day that payroll is
supposed to be issued, his children are sick and he is unavailable to be at
work. The employee’s paychecks cannot be issued without his presence.
Which ethical principle most closely governs this situation?
1.

Responsibilities

2.

Objectivity and Independence

3.

Integrity


4.

Public Interest

The USERRA legislation provided the following:
1.

Military service members receive mandatory priority during the hiring process.

2.

Military service members receive preferential treatment for promotions and raises
during the normal course of business.


3.

Military members must receive the same promotions and compensation that they
would have received when they return from active duty.

4.

Injured military veterans must be allowed to return to work, but their compensation may
be adjusted based on their disability.

Which of the following is not a privacy act related to payroll records?
1.

Community Property Act of 1990.


2.

Freedom of Information Act.

3.

U.S. Department of Labor OCFO-1.

4.

U.S. Department of Health and Human Services Privacy Act 09-40-0006.

60 Free Test Bank for Payroll Accounting 1st Edition by
Landin Multiple Choice Questions - Page 2
If a company chooses to use computer-based accounting, which of the
following is required?
1.

A standalone system that is dedicated to payroll processing.

2.

Annual software updates.

3.

Certification by a CPA prior to use for payroll processing.

4.


Certification and bonding of payroll personnel.

What is the difference in pay practices between salaried exempt and salaried
nonexempt workers?
1.

Salaried exempt workers may only work eight hours per day.

2.

Salaried nonexempt workers must not work overtime hours.


3.

Salaried exempt workers must work between 45 and 50 hours per week.

4.

Salaried nonexempt workers are eligible for overtime pay.

___________________ is required under the Davis-Bacon Act for companies
who do business with the Federal government.
1.

Manual payroll.

2.


Certified payroll.

3.

Outsourced payroll.

4.

Computerized payroll.

The ________________mandated that employers verify an employee’s legal
ability to work in the United States.
1.

Personal Responsibility and Work Opportunity Reconciliation Act of 1996.

2.

Health Insurance Portability and Accountability Act of 1996.

3.

American Reinvestment and Recovery Act of 2009.

4.

Immigration Reform and Control Act of 1986.

Companies may use _____________ and ____________ to allow employees to
have secure, rapid access to their compensation.

1.

Cash; Checks.

2.

Cash; Direct Deposit.

3.

Direct Deposit; Paycards.

4.

Paycards; Checks.


An example of an accounting software package that foster electronic payroll
processing is:
1.

Sage Books.

2.

Quick50.

3.

QuickBooks.


4.

GreatBooks.

Which law requires a company to use certified payroll?
1.

Walsh-Healey Public Contracts Act

2.

Copeland Anti-Kickback Act

3.

Davis-Bacon Act

4.

Sarbanes-Oxley Act

Employers must request a(n) ________________________ for the Internal
Revenue Service to track a firm’s payroll tax obligations.
1.

Social Security Number.

2.


Employer Registration Number.

3.

Tax Identification Number.

4.

Employer Identification Number

The ethical principle of ___________ concerns what is right and just for all
parties involved.
1.

Due Care.

2.

Integrity.


3.

Public Interest.

4.

Objectivity and Independence.

The largest challenge to companies that use manual payroll processing is:

1.

The use of current tax tables.

2.

Obtaining accurate employee data.

3.

Maintaining accurate payroll records.

4.

Filing appropriate governmental reports.

What is the most significant challenge pertaining to payroll that small
businesses face?
1.

Availability of trained personnel

2.

Availability of payroll resources

3.

Accessibility of computer programs


4.

Accessibility of payroll guidance

Many large companies have website portals in which employees may view
and change payroll data. Which of the following is the most significant
concern about such websites?
1.

Accuracy of employee-entered data.

2.

Employer oversight of stored data.

3.

Employee website navigation issues.

4.

Security of personnel data.


The _______________ prohibited discrimination based on race, creed, color,
gender, or national origin.?
1.

Lilly Ledbetter Fair Pay Act of 2009.


2.

Civil Rights Act of 1964.

3.

Equal Pay Act of 1963.

4.

Fair Labor Standards Act of 1935.

According to the Fair Labor Standards Act, nonexempt workers receive
overtime for:
1.

Hours worked in excess of 8 per day and 30 per week.

2.

Hours worked in excess of 40 per week.

3.

Hours worked in excess of 9 per day or 35 per week.

4.

Hours worked in excess of employer-determined rules.


Which of the following is an example of a typical exempt salaried employee?
1.

Operations Manager.

2.

Accounting Clerk.

3.

Executive Assistant.

4.

Machine Operator.

Ryan is an independent contractor for a firm. His employer must:
1.

Dictate the amount of work he performs.

2.

Control the amount and nature of his working hours.


3.

Provide all tools and an appropriate workspace.


4.

Control only deliverables and work content.

Congress passed the __________________ and _________________ were
passed to assist displaced workers.
1.

16th Amendment; Fair Labor Standards Act.

2.

Social Security Act; Medicare Act.

3.

Federal Unemployment Tax Act; Social Security Act.

4.

Federal Income Contributions Act; Federal Unemployment Tax Act.

Adrienne is a nonexempt employee who works for a firm that has a workweek
composed of four 10-hour days. What is the rule about overtime for her work
situation?
1.

She must be compensated for all hours worked past 8 in a single day.


2.

She will receive overtime pay when working more than 10 hours during a shift.

3.

She only receives overtime if she works past 40 hours in any given week.

4.

She is not eligible for overtime pay.

Paycards represent a trend in employee compensation that alleviates the
employee’s need for:
1.

Filing data about time worked.

2.

Bank account establishment.

3.

Functional literacy.

4.

Workplace competence.



Jeremiah is a salaried exempt worker whose standard workday consists of
eight-hour shifts. During a workweek, he exceeded eight hours of work on two
separate days. What is the FLSA provision for the time that he worked past
eight hours in a single day?
1.

He must be compensated at overtime rates for any hours past eight in a single day.

2.

He must reduce the time he works on subsequent days.

3.

He must alert his manager of the extra time on the next business day.

4.

He will receive no additional compensation for the extra time worked.

Prevailing local wages and wage classification strategies for government
contractors were mandated by the _______________.
1.

Davis-Bacon Act.

2.

Walsh-Healey Public Contracts Act.


3.

Fair Labor Standards Act.

4.

Equal Pay Act.

Which of the following is true about independent contractors?
1.

They receive more company benefits than other workers.

2.

They are not subject to any provisions of payroll laws.

3.

They may not work any overtime hours.

4.

They must provide proof of employment insurance before commencing work.


Jonah is one of the payroll accountants in a company that specializes in
custom work for each customer. His biggest payroll challenge is accurate
allocation of labor to jobs. Which of the following represents the most

accurate option to track the company’s labor costs?
1.

Handwritten time slips on which the employee documents the times worked on each
job.

2.

Verbal reporting via telephone of time worked per job.

3.

Computer log-ins when employees change tasks.

4.

Radio-frequency time cards to track time allocations.

The ________________modified the statute of limitations imposed by the
Equal Pay Act of 1963.
1.

Civil Rights Act of 1991.

2.

Family Medical Leave Act of 1993.

3.


Lilly Ledbetter Fair Pay Act of 2009.

4.

Consolidated Omnibus Budget Reformation Act of 1986.

An accountant must remain current in his or her knowledge of current payroll
practices, according to the ethical principle of __________________.
1.

Responsibilities.

2.

Public Interest.

3.

Due Care.

4.

Integrity.


Why is outsourced payroll popular among accounting professionals?
1.

Ease of use.


2.

Data accuracy.

3.

Time reduction.

4.

Records retention.