Mixed Deck — All CPP Topics Flashcards

Which of the following payments is EXCLUDED from the FLSA regular rate of pay calculation?

Answer: Discretionary bonuses determined at the employer's sole discretion

Discretionary bonuses—those not promised in advance and whose amount is determined solely by the employer—are excluded from the regular rate under FLSA Section 7(e)(3).

Year-end payroll reconciliation should confirm that:

Answer: Total W-2 Box 1 wages equal annual gross wages adjusted for pre-tax deductions and non-taxable benefits

Year-end reconciliation ensures W-2 Box 1 taxable wages correctly reflect gross wages minus all pre-tax deductions and excludable benefits.

Which payroll record retention period is required under the FLSA for payroll records such as time cards and work schedules?

Answer: 3 years

The FLSA requires that supplementary records such as time cards, work schedules, and records of additions or deductions be retained for at least 2 years.

An external auditor will accept all of the following procedures EXCEPT:

Answer: Blank payroll checks are kept in storage at the payroll department.

External auditors seek strong internal controls, particularly segregation of duties, to prevent fraud and errors. Keeping blank payroll checks in the payroll department creates a significant control weakness because the same department that calculates and processes payroll also has access to the means of payment. This lack of segregation of duties increases the risk of unauthorized payments or fraud, which an auditor would not accept.

What career advancement paths exist for CPP certified professionals?

Answer: Leadership roles, specialized consulting, education and training, and executive management positions

Certified professionals can advance through specialization, leadership roles, consulting, academic/training positions, and executive management within their field.

Which of the following is NOT a permissible mid-year change event under a Section 125 cafeteria plan?

Answer: Employee decides they want higher take-home pay

Section 125 elections are irrevocable for the plan year except upon a qualifying change-in-status event; a desire for more take-home pay is not a qualifying event.

What is the FUTA tax rate, and on what wage base does it apply?

Answer: 6.0% on the first $7,000 of each employee's wages

The gross FUTA rate is 6.0% on the first $7,000 of wages per employee; a credit of up to 5.4% reduces the net rate to 0.6% for most employers.

Which box on Form W-2 reports Social Security wages?

Answer: Box 3

Box 3 reports total wages subject to Social Security tax, which may differ from Box 1 wages due to pre-tax deductions.

What is the impact of regulatory changes on CPP professionals?

Answer: Regulatory changes require updating practices, procedures, and documentation to maintain compliance

Professionals must monitor and adapt to regulatory changes that affect their practice, ensuring continued compliance and effective service delivery.

Which payroll concept describes the process of increasing a net pay amount to arrive at the gross pay that results in that exact net after all withholdings?

Answer: Gross-up calculation

A gross-up calculation determines the gross wage needed so that after all taxes and deductions, the employee receives a specific net amount.

Which of the following is an example of a pre-tax deduction that reduces an employee's federal taxable wages?

Answer: Traditional 401(k) contribution

Traditional 401(k) contributions are made on a pre-tax basis, reducing the employee's federal taxable wages in the current period.

Which federal law requires employers to post a notice of FLSA rights in a conspicuous place where employees can see it?

Answer: The Fair Labor Standards Act itself

The FLSA requires employers to display the official WHD poster informing employees of their minimum wage, overtime, and child labor rights.

Under the Consumer Credit Protection Act (CCPA), what is the maximum amount that can be garnished from an employee's disposable earnings for a child support order when the employee supports another family?

Answer: 50%

When supporting another spouse or child, the CCPA limits child support garnishment to 50% of disposable earnings (55% if more than 12 weeks in arrears).

Under the Lookback Rule, a new employer with no prior tax history is classified as which type of depositor?

Answer: Monthly depositor

New employers with no prior filing history are automatically classified as monthly depositors until their tax liability history establishes a different schedule.

Under payroll industry standards, which document serves as the primary legal authorization for an employer to change an employee's payroll deductions?

Answer: A signed written authorization from the employee

A signed written authorization from the employee is required by industry standards and often by state law before voluntary payroll deductions can be changed.

What is the penalty rate for failure to make timely federal tax deposits for an employer that is 1 to 5 days late?

Answer: 5%

Deposits made 1 to 5 days late are subject to a 2% penalty; however, deposits that are 6 to 15 days late incur a 5% penalty.

The deadline for furnishing W-2 forms to employees is:

Answer: January 31 of the following year

Employers must furnish W-2 forms to employees by January 31 of the year following the tax year.

Which benefit, even if it is limited to highly paid employees, is tax-free for all employees?

Answer: Transportation-related fringe benefits

Qualified transportation-related fringe benefits, such as transit passes, qualified parking, and vanpooling, are generally excludable from an employee's gross income up to certain statutory limits. This tax-free status applies to all employees, regardless of their pay level, making it a universally tax-advantaged benefit.

Under the ACA employer mandate, applicable large employers (ALEs) must offer minimum essential coverage to at least what percentage of full-time employees?

Answer: 95%

ALEs must offer minimum essential coverage to at least 95% of their full-time employees (and their dependents) to avoid the Section 4980H(a) penalty.

When recording gross wages, the offsetting credits typically go to:

Answer: Cash and various withholding liability accounts

Gross wages are debited to Wages Expense while credits go to cash (net pay) and various withholding liability accounts.