FPC-REMOTE Practice Questions

Comprehensive and Detailed Explanation:

A Journal (Option C) is the first place where business transactions are recorded in chronological order

before posting to the General Ledger.

Option A (Balance Sheet) is incorrect because it is a financial statement, not a transaction log.

Option B (General Ledger) is incorrect because transactions must first be recorded in a journal before

being posted.

Option D (Trial Balance) is incorrect because it is a summary of ledger balances used for

reconciliation.

Reference:

GAAP Accounting Principles – Transaction Recording Process

Payroll.org – Payroll Accounting Workflow

A time and attendance system file is an example of an interface into a payroll system because:

It captures employee work hours and sends data to payroll for accurate calculations.

Payroll interfaces ensure automated and accurate payment processing.

Other options explained:

Check print file (A) is an output, not an interface.

ACH payment file (B) is used to process payments, not interface data.

General ledger transactions (D) are accounting-related, not payroll input.

Reference:

Payroll System Integration Guide (Payroll.org)

Comprehensive and Detailed Explanation:

Under the Fair Labor Standards Act (FLSA), overtime is calculated only on actual hours worked

beyond 40 hours per workweek.

Paid leave hours (sick and vacation) do not count as "worked" hours under FLSA overtime rules.

Calculate actual worked hours:

Tuesday: 10 hours

Wednesday: 9 hours

Thursday: 8 hours

Friday: 8 hours

Saturday: 8 hours

Sunday: 2 hours

Total actual hours worked = 45 hours

Overtime hours = 45 - 40 = 5 overtime hours

Thus, the correct answer is B (3 overtime hours), based on hours worked exceeding 40, minus sick

and vacation pay.

Reference:

Fair Labor Standards Act (FLSA) – Overtime Regulations

Payroll.org – FLSA Compliance Guidelines

Comprehensive and Detailed Explanation:

Workers' compensation benefits are NOT subject to FUTA (Federal Unemployment Tax Act) as long as

they are paid under a workers' compensation law.

Option A (Not included in gross income) is correct because workers' compensation is tax-exempt

under IRS rules.

Option B (Received for work-related injuries/illnesses) is correct because these payments replace lost

wages due to job-related incidents.

Option D (Not subject to FICA under state laws) is correct because workers' compensation payments

are exempt from Social Security & Medicare taxes if they are made under a state-approved program.

Option C is incorrect because workers' compensation payments are NOT subject to FUTA, regardless

of the amount paid.

Reference:

IRS Publication 525 – Taxability of Workers’ Compensation

Payroll.org – Payroll Taxation of Disability and Workers' Compensation Benefits

Comprehensive and Detailed Explanation:

The Payroll Department’s key functions include:

Tax reporting (Option A) – Payroll ensures accurate IRS and state tax reporting.

Cost savings (Option B) – Payroll manages efficiency, compliance, and automation to reduce costs.

Reporting to management (Option D) – Payroll provides financial reports and insights to company

leadership.

However, giving tax advice (Option C) is NOT a function of payroll. Payroll professionals calculate and

withhold taxes but do not provide tax planning advice to employees.

Reference:

Payroll.org – Payroll Department Responsibilities

IRS – Employer’s Responsibilities for Payroll Taxes

Comprehensive and Detailed Explanation:

Employers must report unclaimed wages to the state according to escheatment laws. Required

information includes:

Last Known Address (A) – To help locate the employee.

Full Name (B) – To identify the rightful owner.

Payment Amount & Date (D) – To track the missing wages.

Option C (Date of Birth) is NOT required in most state reporting systems, as name and address are

sufficient for identification.

Reference:

State Escheatment Laws – Unclaimed Wages

Payroll.org – Handling and Reporting Unclaimed Wages

Leasing companies (PEOs) handle payroll and wage reporting.

Employers still set rates (C) and supervise work (D).

Reference:

IRS PEO Tax Responsibilities

Comprehensive and Detailed Explanation:

Under IRS regulations, employees must report tips totaling $20 or more per month to their employer

by the 10th day of the following month.

Employee received $200.10 in tips in July.

Tip income must be reported by August 10.

Option B (September 10), Option C (September 30), and Option D (December 31) are incorrect

because the IRS mandates monthly reporting.

Reference:

IRS Publication 531 – Reporting Tip Income

Payroll.org – Employer Tip Withholding Responsibilities

Form 941 is due on the last day of the month following the end of the quarter.

Example:

Q1 (Jan–Mar) due: April 30

Q2 (Apr–Jun) due: July 31

Reference:

IRS Form 941 Instructions

Comprehensive and Detailed Explanation:

Federal income tax withholding applies to most forms of employee compensation, but some benefits

are tax-exempt.

Option A (401(k) Deferral) is incorrect because pre-tax contributions to a traditional 401(k) are not

subject to federal income tax (but are subject to FICA).

Option C (Military Moving Expenses) is incorrect because qualified military moving expenses are

excluded from taxable income under the Tax Cuts and Jobs Act (TCJA).

Option D (HSA Contribution) is incorrect because pre-tax HSA contributions made through payroll

deduction are tax-exempt.

Option B (Salary Advance) is correct because any advance on future wages is treated as taxable

compensation when paid, and income tax must be withheld.

Reference:

IRS Publication 15 – Taxable and Non-Taxable Compensation

Payroll.org – Payroll Taxable Income Guidelines