CPS Payroll Processing & Systems 2 — Questions and Answers
Question 1: A company switches from a semi-monthly to a biweekly pay frequency. Which of the following is a key consideration during the transition?
- Employees receive fewer total paychecks per year
- Annual withholding calculations must be recalibrated to the new pay period divisor (Correct answer)
- FICA tax rates change based on pay frequency
- State unemployment taxes are no longer applicable
Correct answer: Annual withholding calculations must be recalibrated to the new pay period divisor
Switching pay frequencies requires recalculating per-period withholding amounts using the correct annual-to-period divisor for the new schedule.
Question 2: Which payroll system configuration controls how overtime is calculated for an employee who works in two departments with different pay rates during the same workweek?
- Blended rate rule (Correct answer)
- Straight-time rule
- Fluctuating workweek method
- Regular rate override setting
Correct answer: Blended rate rule
The blended (weighted average) rate rule computes the regular rate across all hours and rates worked, then applies the 0.5x overtime premium.
Question 3: During payroll processing, a system interface fails to transfer hours from the timekeeping system. What is the BEST immediate action?
- Process payroll without those employees and run an off-cycle
- Manually enter hours from supervisor-approved time records after verifying totals (Correct answer)
- Estimate hours based on prior period and adjust next payroll
- Hold payroll until the interface is repaired
Correct answer: Manually enter hours from supervisor-approved time records after verifying totals
Manually entering hours from verified, supervisor-approved records ensures employees are paid accurately and on time while the interface issue is resolved.
Question 4: A payroll specialist receives a garnishment order specifying withholding under Title III of the Consumer Credit Protection Act (CCPA). What does Title III protect?
- The employer from liability for honoring the garnishment
- The employee's disposable earnings from excessive withholding (Correct answer)
- The creditor's right to priority over child support orders
- The state's share of garnished funds
Correct answer: The employee's disposable earnings from excessive withholding
Title III of the CCPA limits the amount of an employee's disposable earnings that may be garnished in any workweek.
Question 5: Which of the following best describes a 'positive pay' file in payroll operations?
- A file listing employees with net-positive earnings after deductions
- A file sent to the bank identifying authorized checks to prevent fraud (Correct answer)
- A report confirming all direct deposit pre-notes were accepted
- A payroll register showing only employees with pay increases
Correct answer: A file sent to the bank identifying authorized checks to prevent fraud
A positive pay file is transmitted to the employer's bank listing issued check numbers and amounts so the bank can flag unauthorized items.
Question 6: An employee's Form W-4 claims 'Exempt' from federal income tax withholding. When must the employee submit a new W-4 to maintain exempt status each year?
- By December 31 of the current year
- By February 15 of the following year (Correct answer)
- By April 15 of the following year
- There is no renewal requirement once exempt is claimed
Correct answer: By February 15 of the following year
Exempt W-4 claims expire annually and must be renewed by February 15 of the new year; otherwise the employer must withhold at the default single rate.
Question 7: Which payroll journal entry correctly records the employer's matching FICA liability for a $10,000 gross payroll period (Social Security rate 6.2%, Medicare rate 1.45%)?
- Debit Payroll Tax Expense $765; Credit FICA Payable $765 (Correct answer)
- Debit FICA Payable $765; Credit Cash $765
- Debit Wages Expense $765; Credit FICA Payable $765
- Debit Payroll Tax Expense $1,530; Credit FICA Payable $1,530
Correct answer: Debit Payroll Tax Expense $765; Credit FICA Payable $765
The employer matches 7.65% ($765) of gross wages, recorded as a debit to Payroll Tax Expense and a credit to FICA Payable.
CPS Payroll Processing & Systems 2
A company switches from a semi-monthly to a biweekly pay frequency.
Which of the following is a key consideration during the transition?