Payroll FPC-REMOTE Practice Exams
Last updated on Oct 22,2026- Exam Code: FPC-REMOTE
- Exam Name: Fundamental Payroll Certification
- Certification Provider: Payroll
- Latest update: Oct 22,2026
Question #61
Which of the following criteria is NOT used to determine if the worker is a nonresident for U.S. income tax purposes?
- A . Supplying a W-9 form
- B . Substantial presence test
- C . Lawful permanent resident test
- D . Impact of tax treaty with another resident country
Correct Answer: A
A
Explanation:
Form W-9 is used for independent contractors (U.S. residents) but does NOT determine residency for tax purposes.
The Substantial Presence Test (B) and Green Card Test (C) are used to determine tax residency. Tax treaties (D) impact tax status for nonresidents.
Reference: IRS Publication 519 (U.S. Tax Guide for Aliens)
A
Explanation:
Form W-9 is used for independent contractors (U.S. residents) but does NOT determine residency for tax purposes.
The Substantial Presence Test (B) and Green Card Test (C) are used to determine tax residency. Tax treaties (D) impact tax status for nonresidents.
Reference: IRS Publication 519 (U.S. Tax Guide for Aliens)
Question #62
Under the FLSA, all of the following categories are defined as "white-collar" exemptions EXCEPT:
- A . Executive
- B . Administrative
- C . Outside Sales
- D . Computer Hardware Operators
Correct Answer: D
D
Explanation:
Under the Fair Labor Standards Act (FLSA), "white-collar exemptions" apply to certain salaried employees who meet specific duties and salary tests. The three main categories are:
Executive (Option A) C Managers with supervisory responsibilities.
Administrative (Option B) C Employees in non-manual work related to business operations.
Outside Sales (Option C) C Sales employees working away from the employer’s place of business.
Option D (Computer Hardware Operators) is incorrect because this role does not qualify for exemption under the FLSA white-collar rules. Only certain IT professionals (software engineers, systems analysts, etc.) qualify under the Computer Employee Exemption.
Reference: U.S. Department of Labor C FLSA Exemptions
Payroll.org C White-Collar Exemption Criteria
D
Explanation:
Under the Fair Labor Standards Act (FLSA), "white-collar exemptions" apply to certain salaried employees who meet specific duties and salary tests. The three main categories are:
Executive (Option A) C Managers with supervisory responsibilities.
Administrative (Option B) C Employees in non-manual work related to business operations.
Outside Sales (Option C) C Sales employees working away from the employer’s place of business.
Option D (Computer Hardware Operators) is incorrect because this role does not qualify for exemption under the FLSA white-collar rules. Only certain IT professionals (software engineers, systems analysts, etc.) qualify under the Computer Employee Exemption.
Reference: U.S. Department of Labor C FLSA Exemptions
Payroll.org C White-Collar Exemption Criteria
Question #63
All of the following employees are examples of phantom employees EXCEPT:
- A . A non-existent employee set up using false information.
- B . A remote employee that is not required to record their time.
- C . A terminated, salaried employee whose status was purposely not changed.
- D . A deceased employee that continues to receive pay due to lost paperwork.
Correct Answer: B
B
Explanation:
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.
Reference: Payroll Fraud Prevention, IRS
Payroll Audit Techniques Guide (IRS Publication)
B
Explanation:
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.
Reference: Payroll Fraud Prevention, IRS
Payroll Audit Techniques Guide (IRS Publication)
Question #64
IRS regulations require employers to take all of the following actions for taxable noncash awards
EXCEPT:
- A . Gross up the value of the award
- B . Tax the value of the award when received
- C . Recognize the value of the award as a business expense
- D . Include the value of the award on Form W-2 in Boxes 1, 3, and 5
Correct Answer: A
A
Explanation:
Employers are not required to "gross up" (A) taxable awards unless they choose to cover the employee’s tax liability.
The IRS mandates taxation and W-2 reporting (B, C, D).
Reference: IRS Publication 15-B
A
Explanation:
Employers are not required to "gross up" (A) taxable awards unless they choose to cover the employee’s tax liability.
The IRS mandates taxation and W-2 reporting (B, C, D).
Reference: IRS Publication 15-B
Question #65
Employer’s federal quarterly employment taxes are reported on:
- A . Form 940
- B . Form 941
- C . Form 944
- D . Form 945
Correct Answer: B
B
Explanation:
Form 941 is used to report quarterly employment taxes (including federal income tax, Social Security, and Medicare).
Form 940 reports FUTA taxes (A), not quarterly employment taxes. Form 944 is for small employers who file annually instead of quarterly. Form 945 is for non-wage income withholding (D).
Reference: IRS Form 941 Instructions
B
Explanation:
Form 941 is used to report quarterly employment taxes (including federal income tax, Social Security, and Medicare).
Form 940 reports FUTA taxes (A), not quarterly employment taxes. Form 944 is for small employers who file annually instead of quarterly. Form 945 is for non-wage income withholding (D).
Reference: IRS Form 941 Instructions
Question #66
All of the following elements are part of the control process EXCEPT:
- A . Batch Totals
- B . System Edits
- C . Unauthorized Overtime
- D . Balancing and Reconciliation
Correct Answer: C
C
Explanation:
The payroll control process ensures accuracy and compliance by verifying records, preventing fraud, and reconciling financial transactions.
Batch Totals (Option A) C Used to verify transaction accuracy.
System Edits (Option B) C Automated controls to prevent errors.
Balancing & Reconciliation (Option D) C Ensures payroll matches financial records.
Option C (Unauthorized Overtime) is incorrect because overtime management is an operational issue, not a control process.
Reference: Payroll.org C Payroll Audit and Internal Control Procedures IRS C Payroll Recordkeeping and Compliance Guide
C
Explanation:
The payroll control process ensures accuracy and compliance by verifying records, preventing fraud, and reconciling financial transactions.
Batch Totals (Option A) C Used to verify transaction accuracy.
System Edits (Option B) C Automated controls to prevent errors.
Balancing & Reconciliation (Option D) C Ensures payroll matches financial records.
Option C (Unauthorized Overtime) is incorrect because overtime management is an operational issue, not a control process.
Reference: Payroll.org C Payroll Audit and Internal Control Procedures IRS C Payroll Recordkeeping and Compliance Guide
Question #67
Payroll liability tax accounts should be reconciled at LEAST once a:
- A . Week
- B . Month
- C . Quarter
- D . Year
Correct Answer: B
B
Explanation:
Payroll liabilities (taxes, deductions, and withholdings) must be reconciled regularly to prevent errors and ensure compliance.
Best practice is monthly reconciliation (Option B) to ensure:
Payroll taxes match general ledger accounts.
Deposits are made on time to avoid IRS penalties.
Payroll liability accounts are balanced before quarterly tax filings.
Option A (Weekly) is impractical unless payroll runs very frequently.
Option C (Quarterly) and Option D (Yearly) are too infrequent and may result in tax errors or compliance issues.
Reference: Payroll.org C Payroll Tax Liability Reconciliation Best Practices IRS C Payroll Tax Deposit and Reporting Compliance
B
Explanation:
Payroll liabilities (taxes, deductions, and withholdings) must be reconciled regularly to prevent errors and ensure compliance.
Best practice is monthly reconciliation (Option B) to ensure:
Payroll taxes match general ledger accounts.
Deposits are made on time to avoid IRS penalties.
Payroll liability accounts are balanced before quarterly tax filings.
Option A (Weekly) is impractical unless payroll runs very frequently.
Option C (Quarterly) and Option D (Yearly) are too infrequent and may result in tax errors or compliance issues.
Reference: Payroll.org C Payroll Tax Liability Reconciliation Best Practices IRS C Payroll Tax Deposit and Reporting Compliance
Question #68
The employer’s unpaid portion of payroll taxes is posted as a credit to a(n):
- A . Asset account
- B . Current liability account
- C . Long-term liability account
- D . Expense account
Correct Answer: B
B
Explanation:
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.
Reference: Payroll Accounting Guidelines (Payroll.org)
IRS Employer Tax Guide (Publication 15)
B
Explanation:
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.
Reference: Payroll Accounting Guidelines (Payroll.org)
IRS Employer Tax Guide (Publication 15)
Question #69
An employee has $240,000.00 in YTD taxable wages and receives a taxable fringe benefit of $2,500.00. Calculate the Medicare and FITW using the optional flat rate method for the taxable fringe benefit.
- A . $586.25
- B . $606.75
- C . $661.25
- D . $683.75
Correct Answer: B
B
Explanation:
Step 1: Calculate Medicare Tax
Medicare rate: 1.45% up to $200,000; 2.35% for amounts above $200,000
Medicare tax: ($2,500 × 2.35%) = $58.75
Step 2: Calculate FITW using the Optional Flat Rate (22%)
$2,500 × 22% = $550.00
Total tax liability = $550.00 + $58.75 = $606.75
Reference: IRS Publication 15-B (Fringe Benefits Taxation)
B
Explanation:
Step 1: Calculate Medicare Tax
Medicare rate: 1.45% up to $200,000; 2.35% for amounts above $200,000
Medicare tax: ($2,500 × 2.35%) = $58.75
Step 2: Calculate FITW using the Optional Flat Rate (22%)
$2,500 × 22% = $550.00
Total tax liability = $550.00 + $58.75 = $606.75
Reference: IRS Publication 15-B (Fringe Benefits Taxation)
Question #70
An employee has received $169,000.00 in YTD earnings. The employee receives a payment of $16,600.00.
The employer Medicare tax, if any, is:
- A . $2,450.50
- B . $1,029.20
- C . $240.70
- D . $1,859.01
Correct Answer: C
C
Explanation:
Medicare tax is 1.45% on wages up to $200,000, and 2.35% (including the Additional Medicare Tax) on wages above $200,000.
YTD Wages before payment: $169,000.00
New total earnings after bonus: $169,000 + $16,600 = $185,600.00
Since total wages are still under $200,000, only the standard Medicare rate applies:
$16,600 × 1.45% = $240.70
Thus, the correct answer is
C. $240.70.
Reference: IRS C Medicare Tax Guide
Payroll.org C Payroll Tax Calculation Rules
C
Explanation:
Medicare tax is 1.45% on wages up to $200,000, and 2.35% (including the Additional Medicare Tax) on wages above $200,000.
YTD Wages before payment: $169,000.00
New total earnings after bonus: $169,000 + $16,600 = $185,600.00
Since total wages are still under $200,000, only the standard Medicare rate applies:
$16,600 × 1.45% = $240.70
Thus, the correct answer is
C. $240.70.
Reference: IRS C Medicare Tax Guide
Payroll.org C Payroll Tax Calculation Rules