APA FPC-Remote Exam Practice Test Instant Access

Question 1

Which of the following circumstances would cause a breach of confidentiality?

AFurnishing payment history on a written authorization to a mortgage company

BProviding benefit election information to an employee's spouse

CSharing general ledger costing data with the accounting department

DSupplying payroll records to the company's legal department

Answer : B

Comprehensive and Detailed Explanation:

Payroll confidentiality ensures employee information is only disclosed with proper authorization.

Option A (Payment history with written authorization) is NOT a breach because the employee provided consent.

Option C (General ledger costing shared with accounting) is NOT a breach since accounting requires financial data for compliance.

Option D (Payroll records to legal department) is NOT a breach as legal teams need data for investigations.

Option B (Providing benefit election information to a spouse) is a breach unless the employee has explicitly authorized their spouse to receive this information.

Payroll.org -- Payroll Data Privacy Guidelines

HIPAA & Confidentiality in Payroll Recordkeeping

Question 2

Which organization should be contacted when placing a stop payment on a check?

AFDIC

BNACHA

CODFI

DRDFI

Answer : C

ODFI (Originating Depository Financial Institution) is responsible for initiating payroll transactions, including stop payments.

RDFI (Receiving Depository Financial Institution) receives funds but does not control stop payments.

NACHA (National Automated Clearing House Association) sets ACH rules but does not process transactions.

FDIC (Federal Deposit Insurance Corporation) insures bank deposits but does not handle payment stops.

NACHA Operating Rules & Guidelines

Payroll Banking & ACH Processing Guide (Payroll.org)

Question 3

Which of the following situations does NOT reflect constructive receipt of wages?

ACheck is in the employee's possession.

BDirect deposit funds are made available to the employee.

CEmployer mails paycheck through the United States Postal Service.

DPayment has been set aside in the Payroll Department for employee pickup.

Answer : C

Constructive receipt means income is available to the employee even if not physically received.

Option C is correct because when a paycheck is mailed, it is not immediately available, delaying constructive receipt.

IRS Publication 15 (Employer's Tax Guide)

Payroll Tax Compliance Guide (Payroll.org)

Question 4

When an employer allocates tips, which of the following statements is TRUE?

AAllocated tips are subject to federal income tax withholding

BThe employer is not liable for amounts incorrectly allocated

CReport the allocated amount on the employee's Form W-2

DNo allocation is made for any reported tips

Answer : C

Comprehensive and Detailed Explanation:

Employers must allocate tips if the total reported tips are less than 8% of gross receipts for establishments where tipping is customary.

Allocated tips are reported on Form W-2, Box 8 (Option C) but are NOT subject to withholding.

Option A is incorrect because allocated tips are not subject to automatic withholding unless voluntarily reported by the employee.

Option B is incorrect because employers are responsible for accurate tip reporting.

Option D is incorrect because tip allocation rules require reporting when applicable.

IRS Publication 531 -- Reporting Tip Income

Payroll.org -- Employer Tip Allocation Rules

Question 5

All of the following employees are examples of phantom employees EXCEPT:

AA non-existent employee set up using false information.

BA remote employee that is not required to record their time.

CA terminated, salaried employee whose status was purposely not changed.

DA deceased employee that continues to receive pay due to lost paperwork.

Answer : B

Phantom employees are fraudulent payroll entries where salaries are paid to non-existent or inactive employees.

Option A, C, and D are examples of phantom employees.

Option B (Remote employees not required to record time) is NOT a phantom employee, as long as they are legitimate workers.

Payroll Fraud Prevention, IRS

Payroll Audit Techniques Guide (IRS Publication)

Question 6

When a payer receives a ''B'' Notice, it must send a copy of the notification to the payee within:

A15 days.

B30 days.

C60 days.

D90 days.

Answer : B

A 'B' Notice (Backup Withholding Notice) is sent by the IRS when a payee's taxpayer ID does not match records.

The employer must notify the payee within 30 days to correct their details.

Failure to comply results in backup withholding of 24% on future payments.

IRS Publication 1281 (Backup Withholding Notices)

Question 7

Which of the following forms of identification CANNOT be used in Section 2 of Form I-9?

ADriver's license

BEmployee badge

CSchool ID card with photo

DVoter's registration card

Answer : B

Employee badges (B) are NOT acceptable as proof of identity for Form I-9.

Acceptable IDs include passports, driver's licenses, and other government-issued documents.

USCIS Form I-9 Acceptable Documents List

APA FPC-Remote Fundamental Payroll Certification Exam Practice Test