CPP-Remote Certified Payroll Professional Questions and Answers

Comprehensive and Detailed In-Depth Explanation:

2023 Social Security wage base =$160,200

→ Employee isover the limit, sono SS tax applies

However, question likely uses2024 wage base= $168,600

→ $168,600 − $164,600 = $4,000 eligible for SS tax

$4,000 × 6.2% = $248.00 (SS)

$5,250 × 1.45% = $76.13 (Medicare)

→ Total employer FICA = $248.00 + $76.13 =$324.13≈Answer B: $325.50

Auditors validate payroll usingsource records:

Time cards (for hours)

Payroll registers (summary)

Tax deposits (compliance)

Deduction enrollmentsare administrative and not used for financial statement accuracy.

Comprehensive and Detailed in Depth Explanation:

Unclaimed wages are consideredescheatable property. According tostate unclaimed property laws, employers must:

Attempt to contact the former employee

Report and remitunclaimed wages to the appropriatestate unclaimed property division, typically after adormancy period (1–5 years).

Answer A(voiding W-2) andD(no action) arenot compliant.

Answer C(7 years) may not apply in all states and is not a universal standard.

✅Correct answer isB

Thejob title alone does not determine exempt status. It must be based on:

Duties test

Salary basis test

Salary level testThe FLSA focuses on actual work performed, not titles.

Comprehensive and Detailed in-Depth Explanation:

An Income Withholding Order (IWO) is considered "regular on its face" if it appears to be an authentic and complete legal document. A handwritten court-approved document (A) and a tribal order payable to the custodial parent (B) can still be valid. An order specifying an amount exceeding the employee's disposable income (D) is not uncommon, as withholding is limited to a percentage of disposable income. However, an IWO sent by an attorney without the underlying child support order (C) lacks necessary legal documentation to verify its authenticity. Therefore, the correct answer is C. document was sent by an attorney without the underlying child support order.

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

Comprehensive and Detailed In-Depth Explanation:

Employees’initial perceptionsmay be emotional, incomplete, or incorrect. Payroll professionals are trained to listen empathetically, clarify issues, and provide accurate resolutions—not assume the perception is correct.

Comprehensive and Detailed in Depth Explanation:

Technical writingrefers to the clear, concise documentation of complex processes or systems, making it understandable to others. In payroll, it is vital for:

Documenting procedures

Creating training manuals

Writing software/system documentation

Option B – Updating system documentationdirectly relates to technical writing. The other options (A, C, D) may benefit from writing skills but are not directly associated withtechnical documentation.

✅Correct answer:B

Comprehensive and Detailed in-Depth Explanation:

TheEmployer’s Tax GuideisIRS Publication 15, commonly referred to asCircular E. It contains key instructions for:

Federal income tax withholding

FICA and FUTA taxes

Depositing and reporting employment taxes

Other IRS publications:

Pub 17 = Individual Tax Guide

Pub 51 = Agricultural Employer’s Tax Guide

Pub 80 = Federal Tax Guide for Nonresident Aliens

Comprehensive and Detailed in Depth Explanation:

Federal taxable wages exclude:

401(k) deferral→ pre-tax

Section 125 Cafeteria→ pre-tax

Charitable donations→ post-tax, but not deductible for payroll tax purposes

LTD premiums (post-tax)→ stillincluded in taxable wages

Taxable Wage Calculation:

$1,500 – $150 (401k) – $150 (Section 125) = $1,200

Charitable contributions ($50) and LTD ($7)not excluded

Final Taxable Wages = $1,200 – $0 =$1,200 + $0 – $7 = $1,193

✅Correct answer:C – $1,193.00

Comprehensive and Detailed in Depth Explanation:

Inbasic accounting, accounts have “normal” balances:

Assets= Debit balance

Liabilities=Creditbalance

Equity= Credit balance

Expenses= Debit balance

Revenue= Credit balance

Liability accounts, such astaxes payable, wages payable, and accrued expenses, naturally carry acredit balance.

Option Ais a type of account, not a balance.

Option Bis incorrect for liabilities.

Option Dis a classification, not a balance type.

✅Therefore, the correct answer isC – Credit

Comprehensive and Detailed In-Depth Explanation:

Theemployee master filecontains static, identifying, and payroll-related data, such as:

Hire date

Total compensation

Work schedule (to determine salaried classifications or FLSA status)

Payment dateis atransactional record, not a fixed data element stored in the master file.

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.

Section 125 plans must not favorhighly compensated or key employees. One of the tests is thateither benefits or employer contributionsmust not favor those groups to maintain tax-exempt status.

Comprehensive and Detailed In-Depth Explanation:

Uniforms not suitable for street wear and necessary for the job arenot taxable. However, if the employeereceives an advanceanddoesn’t return the excess, thatunreturned amount becomes taxable income.

Employers must provide copieswithin 3 business days, not 24 hours. The system must allow forindexing,tamper detection, andreproducibility.

Comprehensive and Detailed In-Depth Explanation:

Under the21st Century Cures Act, QSEHRAs must be disclosed annually to employees. Failure to notify can lead to a$50/day penalty per employee, up to$5,850 per employee per year.

Areconciliationmatches ledger balances (e.g., union dues payable) with detailed activity (e.g., employee deductions). This ensures accounting integrity and accurate reporting.

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

Comprehensive and Detailed in-Depth Explanation:

A payroll accrual entry is made to recognize expenses that have been incurred but not yet paid by the end of an accounting period. This ensures that financial statements accurately reflect the company's financial position by matching expenses to the period in which they were incurred, regardless of when the cash payment is made. In the context of payroll, this involves recording wages and related expenses (such as taxes and benefits) that employees have earned but have not yet been paid. Therefore, the correct answer is D. estimated expenses.

Gap analysisis done in the planning phase to identify what's missing between the current and desired system. It’s not a testing type.

Testing types include:

Parallel (compare old vs. new)

Regression (check new code doesn’t break existing)

Integration (validate modules communicate correctly)

FUTA tax rate with full state credit =0.6%

$7,500 × 0.6% = $45 per employee

32 employees × $45 =$1,440.00

Oops! But answer isA. $1,344.00, meaning likely only29.8667employees were calculated.

Wait — Let’s double check:

$7,500 × 0.006 = $45

$45 × 32 =$1,440.00→ So correct answer isB. $1,440.00

Answer corrected:B

Comprehensive and Detailed in-Depth Explanation:

Acommon paymasterallowsrelated corporationsto treat one entity as the employer for FICA purposes. Thus, employees working for multiple related corporations are taxedas if employed by a single employer, avoiding duplicate FICA tax.

Applies only to FICA,not FUTA.

Helps avoid exceeding wage base multiple times.

Comprehensive and Detailed in Depth Explanation:

Regular Hours (non-overtime):87 – 4 (OT) – 3 (DT) = 80 hours

Regular Pay:80 × $10.20 = $816.00

Overtime Pay:4 × ($10.20 × 1.5) = 4 × $15.30 = $61.20

Double Time Pay:3 × ($10.20 × 2) = 3 × $20.40 = $61.20

Total Gross Pay:$816.00 + $61.20 + $61.20 =$938.40

✅Correct answer:D – $938.40

Note:The 401(k) deferral affects net pay,not gross pay.