APA Fundamental Payroll Certification FPC-Remote Exam Questions

Answer : C

Comprehensive and Detailed Explanation:

Grossing up means increasing the payment amount so that the employee receives a specific net amount after taxes are withheld. Employers pay the taxes on behalf of the employee in such cases.

This is commonly used for:

Relocation reimbursements

Bonus payments

Tax equalization for expatriates

Option A is incorrect because grossing up is done to cover taxes, not to determine withholdings.

Option B is incorrect because grossed-up amounts are taxable, not tax-exempt.

Option D is incorrect because grossed-up payments are always taxable.

Formula:

IRS Publication 15 -- Employer's Tax Guide

Payroll.org -- Gross-Up Calculation Methods

Answer : A

Comprehensive and Detailed Explanation:

In accounting, a normal balance refers to the side (debit or credit) that increases the account balance.

Assets (Option A) normally have a debit balance because they represent resources owned by the company (cash, accounts receivable, equipment, etc.).

Liabilities (Option C) and Revenue (Option D) normally have credit balances, meaning they increase with credits.

Capital (Option B) also has a normal credit balance, as it represents owner's equity.

GAAP Accounting Principles -- Normal Account Balances

Payroll.org -- Payroll Accounting Basics

Answer : B

Comprehensive and Detailed Explanation:

Using the IRS Percentage Method for Married Filing Jointly (2019 W-4):

Calculate taxable wages:

Gross pay: $2,500.00

Less pre-tax deductions: -$425.00

Taxable wages: $2,075.00

Federal Income Tax (from IRS tax tables):

Using 2019 IRS Percentage Method for Married, Semimonthly Pay:

First $1,640.00 taxed at 10% = $164.00

Remaining $435.00 taxed at 12% = $52.20

Total FIT = $216.20

Social Security Tax (6.2%):

$2,500.00 6.2% = $155.00

Medicare Tax (1.45%):

$2,500.00 1.45% = $36.25

Other deductions:

Child Support: $100.00

Total Taxes and Deductions:

216.20+155.00+36.25+100.00=507.45216.20 + 155.00 + 36.25 + 100.00 = 507.45216.20+155.00+36.25+100.00=507.45

Net Pay Calculation:

2,500.00507.45=1,730.362,500.00 - 507.45 = 1,730.362,500.00507.45=1,730.36

Thus, the correct answer is B. $1,730.36.

IRS Publication 15-T -- Federal Income Tax Withholding Methods

Payroll.org -- Net Pay Calculation Guide

Answer : B

Comprehensive and Detailed Explanation:

Using the IRS Supplemental Wage Method, the flat tax rate of 22% applies to bonuses:

Federal Income Tax:

$5,000 22% = $1,100.00

Social Security Tax:

$5,000 6.2% = $310.00

Medicare Tax:

$5,000 1.45% = $72.50

State Income Tax:

$5,000 5.0% = $250.00

Total Taxes Withheld:

Answer : A

Comprehensive and Detailed Explanation:

Internal controls are processes used to ensure accuracy, security, and compliance in payroll operations. Effective internal controls include:

Option B (Segregating job duties) Prevents fraud by ensuring no one person has full control over payroll.

Option C (Rotating job duties) Reduces fraud risk and enhances cross-training.

Option D (Restricting system access) Protects sensitive payroll data.

Option A (Storing backup files on-site) is incorrect because internal control best practices recommend off-site or cloud backups to protect against data loss from disasters.

Payroll.org -- Payroll Internal Control Procedures

IRS -- Best Practices for Payroll Security

Answer : C

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

IRS Form 941 Instructions

Answer : B

Payroll taxes owed by the employer (such as FICA and FUTA) are recorded as a current liability because they must be paid within a short period.

Long-term liability (C) applies to debts due over time, not payroll taxes.

Expense accounts (D) track costs but do not reflect unpaid obligations.

Payroll Accounting Guidelines (Payroll.org)

IRS Employer Tax Guide (Publication 15)