1. Which of the following is considered a "deferred
compensation" plan?
A. Health savings account (HSA)
B. 401(k) retirement plan
C. Unemployment insurance
D. Workers' compensation
Answer: B) 401(k) retirement plan
Rationale: A 401(k) is a deferred compensation plan that allows
employees to set aside a portion of their salary for retirement
before taxes.
2. What is a W-4 form used for?
A. Reporting annual income to the IRS
B. Claiming personal allowances and withholding preferences
C. Reporting previous year’s taxes
D. Requesting unemployment benefits
Answer: B) Claiming personal allowances and withholding
preferences
Rationale: The W-4 form is used by employees to inform their
employers about their tax filing status and the number of
allowances to claim for withholding purposes.
,3. Which of the following describes "taxable income"?
A. Income after deductions
B. Gross pay minus voluntary deductions
C. The total amount an employee is paid before any deductions
D. The amount of income subject to federal income tax
Answer: D) The amount of income subject to federal income tax
Rationale: Taxable income refers to the portion of an employee's
earnings that is subject to federal income tax.
4. Which of the following is true regarding payroll taxes for
independent contractors?
A. Independent contractors are subject to federal income tax
withholding
B. Independent contractors pay Social Security and Medicare
taxes through self-employment tax
C. Independent contractors receive W-2 forms at the end of the
year
D. Employers withhold state income taxes for independent
contractors
Answer: B) Independent contractors pay Social Security and
Medicare taxes through self-employment tax
Rationale: Independent contractors are not subject to federal
withholding but are responsible for paying both the employer and
, employee portion of Social Security and Medicare taxes through
self-employment tax.
5. Which of the following would NOT be considered part of an
employee’s payroll?
A. Salary
B. Commissions
C. Workers' compensation benefits
D. Bonus
Answer: C) Workers' compensation benefits
Rationale: Workers' compensation is a separate benefit from an
employee’s regular payroll, providing financial support in case of
workplace injury.
6. Which of the following is an example of an involuntary
deduction from an employee’s wages?
A. Union dues
B. Retirement contributions
C. Federal income tax
D. Health insurance premium
Answer: C) Federal income tax
Rationale: Federal income tax is an involuntary deduction
required by the government based on an employee’s income level.
compensation" plan?
A. Health savings account (HSA)
B. 401(k) retirement plan
C. Unemployment insurance
D. Workers' compensation
Answer: B) 401(k) retirement plan
Rationale: A 401(k) is a deferred compensation plan that allows
employees to set aside a portion of their salary for retirement
before taxes.
2. What is a W-4 form used for?
A. Reporting annual income to the IRS
B. Claiming personal allowances and withholding preferences
C. Reporting previous year’s taxes
D. Requesting unemployment benefits
Answer: B) Claiming personal allowances and withholding
preferences
Rationale: The W-4 form is used by employees to inform their
employers about their tax filing status and the number of
allowances to claim for withholding purposes.
,3. Which of the following describes "taxable income"?
A. Income after deductions
B. Gross pay minus voluntary deductions
C. The total amount an employee is paid before any deductions
D. The amount of income subject to federal income tax
Answer: D) The amount of income subject to federal income tax
Rationale: Taxable income refers to the portion of an employee's
earnings that is subject to federal income tax.
4. Which of the following is true regarding payroll taxes for
independent contractors?
A. Independent contractors are subject to federal income tax
withholding
B. Independent contractors pay Social Security and Medicare
taxes through self-employment tax
C. Independent contractors receive W-2 forms at the end of the
year
D. Employers withhold state income taxes for independent
contractors
Answer: B) Independent contractors pay Social Security and
Medicare taxes through self-employment tax
Rationale: Independent contractors are not subject to federal
withholding but are responsible for paying both the employer and
, employee portion of Social Security and Medicare taxes through
self-employment tax.
5. Which of the following would NOT be considered part of an
employee’s payroll?
A. Salary
B. Commissions
C. Workers' compensation benefits
D. Bonus
Answer: C) Workers' compensation benefits
Rationale: Workers' compensation is a separate benefit from an
employee’s regular payroll, providing financial support in case of
workplace injury.
6. Which of the following is an example of an involuntary
deduction from an employee’s wages?
A. Union dues
B. Retirement contributions
C. Federal income tax
D. Health insurance premium
Answer: C) Federal income tax
Rationale: Federal income tax is an involuntary deduction
required by the government based on an employee’s income level.
