An Introduction to Payroll Administration 3rd Canadian Edition By Alan Dryden – Test Bank

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Sample Test File: Chapter 03 Test Bank True/False [QUESTION] 1. The pay cycle is determined by the Canada Revenue Agency and cannot be altered by the employer. Ans: False Learning Objective: 03­01 Topic: 03­02


Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 2. The employment contract may express payment in any method imagined (for example: per hour, per year, per unit, per dollar sold, per telephone call, per page written, etc.). Ans: True Learning Objective: 03­01 Topic: 03­02 Difficulty: Easy Accessibility: Keyboard Navigation [QUESTION] 3. Employees who earn a salary can be asked to work more than 44 hours in a week without being entitled to overtime pay. Ans: False Learning Objective: 03­01 Topic: 03­04 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 4. To qualify as a taxable benefit the employee must receive something that is of a personal benefit to them. Ans: True


Learning Objective: 03­02 Topic: 03­06 Difficulty: Easy Accessibility: Keyboard Navigation [QUESTION] 5. Mary has a job as waitress at a small restaurant. Tips are pooled in a jar and distributed back to employees at the end of each shift by the manager. These tips are not considered taxable income because they are funded by the patrons rather than the owner of the business. Ans: False Learning Objective: 03­02 Topic: 03­08 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 6. Rachel works at Taco Bell and receives a free meal at the end of each shift. This meal must be included in her pay calculation as a taxable benefit. Ans: True Learning Objective: 03­02 Topic: 03­08 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION]


7. Amblake Co. offers a $500 prize to employees who have completed a voluntary survey to help them gather information about employee engagement. This bonus does not have to be taxed. Ans: False Learning Objective: 03­02 Topic: 03­08 Difficulty: Moderate Accessibility: Keyboard Navigation Multiple Choice [QUESTION] 8. If an employee earns a salary of $58,500 per year, their weekly pay cycle salary would be: 9. $4,875.00 10.

$2,437.50

11.

$2,250.00

12.

$1,125.00

13.

$562.50

Ans: D Learning Objective: 03­01 Topic: 03­02 Topic: 03­04


Difficulty: Easy Accessibility: Keyboard Navigation [QUESTION] 9. If an employee earns a salary of $58,500 per year, their semi­monthly pay cycle salary would be: 10.

$4,875.00

11.

$2,437.50

12.

$2,250.00

13.

$1,125.00

14.

$562.50

Ans: B Learning Objective: 03­01 Topic: 03­02 Topic: 03­04 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 10. If Mary earns $260,000 per year how much does she earn per week? 11.

$10,000

12.

$5,000

13.

$260,000


14.

$2,500

15.

$6,000

Ans: B Learning Objective: 03­01 Topic: 03­04 Difficulty: Easy Accessibility: Keyboard Navigation [QUESTION] 11. If Sue earns $55 per hour and works 15 hours, what is her gross pay for the period? 12.

$825

13.

$750

14.

$55

15.

$15

16.

$1,235.70

Ans: A Learning Objective: 03­01 Topic: 03­03 Difficulty: Easy Accessibility: Keyboard Navigation [QUESTION] 12.

An example of a taxable benefit would be:


13.

Tuition paid for a WordPress course required for work.

14.

Use of a company car while working.

15.

An ergonomic chair provided for the employee to use at the office.

16.

A paid gym membership.

17.

Airline tickets to travel to an office event.

Ans: D Learning Objective: 03­02, 03­03 Topic: 03­06 Topic: 03­14 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 13. Reimbursement of costs covered by employees on behalf of the employer such as travel expenses and meal allowances: 14.

Are reported as part of gross wages.

15.

Increase the employee’s taxable income.

16. Typically are paid through Accounts Payable and do not impact deductions. 17.

Must be reported on a T4 to the Canada Revenue Agency.

18.

Must be below $300 per person per calendar year.

Ans: C Learning Objective: 03­02 Topic: 03­05


Topic: 03­12 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 14.

The following is not an example of a taxable allowance:

15. Cash paid to an employee to purchase normal clothing to wear on the job. 16.

Cash paid to cover living expenses.

17. Cash paid to cover the cost of personal vehicle which may be used for company business. 18. Cash paid to cover travel expenses such as hotels, airfare, taxis, meals, etc. 19. Cash paid to cover entertainment costs not for the benefit of the company. Ans: D,E Learning Objective: 03­02 Topic: 03­05 Difficulty: Easy Accessibility: Keyboard Navigation [QUESTION] 15. Cell phone service paid for by the employer for the employee’s personal use is: 16.

Not taxable


17.

Taxable with CPP and EI deductions

18.

Taxable with CPP deductions but not EI

19.

Taxable with EI deductions but not CPP

20.

Not taxable but subject to CPP deductions

Ans: C Learning Objective: 03­02, 03­03 Topic: 03­06 Topic: 03­14 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 16.

Use of a company gym on site (recreational facility) is:

17.

Not taxable

18.

Taxable with CPP and EI deductions

19.

Taxable with CPP deductions but not EI

20.

Taxable with EI deductions but not CPP

21.

Not taxable but subject to CPP deductions

Ans: C Learning Objective: 03­02, 03­03 Topic: 03­06 Topic: 03­14 Difficulty: Moderate Accessibility: Keyboard Navigation


[QUESTION] 17.

Payments for guests travelling with an employee, in cash are:

18.

Not taxable

19.

Taxable with CPP and EI deductions

20.

Taxable with CPP deductions but not EI

21.

Taxable with EI deductions but not CPP

22.

Not taxable but subject to CPP deductions

Ans: B Learning Objective: 03­02, 03­03 Topic: 03­06 Topic: 03­14 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 18. Cash reimbursement for money spent to pay for office supplies such as postage stamps are: 19.

Not taxable

20.

Taxable with CPP and EI deductions

21.

Taxable with CPP deductions but not EI

22.

Taxable with EI deductions but not CPP

23.

Not taxable but subject to CPP deductions


Ans: A Learning Objective: 03­02, 03­03 Topic: 03­06 Topic: 03­14 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION] 19. This information is not required in order to calculate the automobile taxable benefit for employees who are permitted to use company owned cars for personal use. 20.

The total number of kilometres driven.

21.

The total amount of business kilometres driven.

22.

The purchase price of the automobile.

23.

The cost of gas for personal driving.

24. The amount of money reimbursed to the employer by the employee for personal use. Ans: D Learning Objective: 03­02 Topic: 03­07 Difficulty: Moderate Accessibility: Keyboard Navigation [QUESTION]


20. The CEO of Amblake Co. would like to offer free parking to all employees in a prime downtown space. What impact will this have on their pay? 21.

No impact.

22.

Will increase their rate of pay per hour.

23.

Will reduce their net income by the full value of the parking space.

24.

Will result in lower statutory deductions.

25.

Will result in higher statutory deductions.

Ans: E Learning Objective: 03­02 Topic: 03­06 Difficulty: Difficult Accessibility: Keyboard Navigation Short Answer [QUESTION] 21. Fred Vedaro is paid bi­weekly and earns $15 per hour with overtime paid after 44 hours in one week. Fred works 48 hours in the first week and 39 in the second. Vacation pay at 4% will be paid on each pay cycle. Calculate Fred’s gross wages for this two week period. Ans: Type of Wage Regular

Calculation Week 1 – 44 hours


Week 2 – 39 hours Total 83 hours at $15/ hour

Overtime Vacation Pay

Week 1 – 4 hours Week 2 – 0 hours Total 4 hours at $15/ hour x 1.5 4% of ($1245.00 + $90.00= $1,335.00)

Total Wages

Learning Objective: 03­01 Topic: 03­03 Difficulty: Moderate [QUESTION] 22. Martha Jovia is paid weekly and earns $25 per hour with overtime paid after 44 hours in one week or 8 hours in one day. Martha worked 4 hours on Sunday, 8 hours on Monday, 10 on Tuesday, 7 on Wednesday and nothing for the remainder of the week. Vacation pay at 6% will be paid on each pay cycle. She also earns a shift premium of 5% for each hour worked on a weekend. Calculate Martha’s gross wages for this one week period. Ans: Type of Wage

Calculation

Regular

Sunday – 4 hours Monday – 8 hours Tuesday – 8 hours Wednesday – 7 hours Total 27 hours at $25/ hour


Overtime

Tuesday – 2 hours Total 2 hours at $25/ hour x 1.5

Shift Premium

Sunday – 5 hours Total 5 hours at 5% x $25/ hour

Vacation Pay Total Wages

6% of ($675.00 + $75.00 + $6.25)

Learning Objective: 03­01 Topic: 03­03 Difficulty: Moderate [QUESTION] 23.

List 3 examples of taxable benefits.

Ans: Solutions could include: Personal use of an employer vehicle. Premiums paid by the employer for life insurance. Parking fees paid by the employer when a vehicle is not required for the job. Interest­free loans. RRSP contributions by the employer. Learning Objective: 03­02 Topic: 03­06 Difficulty: Easy [QUESTION] 24. What information is required to utilize the Canada Revenue Agency online calculator of the automobile taxable benefit?


Ans: The original cost of the vehicle The number of months access is provided in the year. The total number of kilometres driven. The total number of kilometres driven for business purposes. The amount of money reimbursed by the employee to the employer for personal use. Learning Objective: 03­02 Topic: 03­07 Difficulty: Easy [QUESTION] 25. Frank Hill works for a company with a semi­monthly pay cycle. He earns $80,000 per year and receives over­time paid at time and a half for any approved hours worked in excess of 40 hours per week. He receives a parking allowance of $100 per month and is paid $25 per hour for working on­call on weekends. During this pay cycle Frank worked 9 hours of approved over­time this pay cycle and was on­call for 10 hours on Saturday. Calculate Frank’s gross earnings for this pay cycle. Ans: Type of Wage

Calculation

Regular

$80,000 ÷ 24 pay periods

Overtime

$80,000 ÷ (40*52) = $38.46 regular rate/hour 9 x $38.46 x 1.5

Parking Allowance

$100 x 12 ÷ 24

On Call Pay

$25/hour x 10 hours

Gross Earnings


Learning Objective: 03­01, 03­02, 03­03 Topic: 03­04 Topic: 03­06 Topic: 03­14 Difficulty: Difficult [QUESTION] 26. Sophie Gowna works for a company with a bi­weekly pay cycle. She earns $30 per hour and receives over­time paid at time and a half for any hours worked over 37.5 in one week. Sophie receives a cash company car allowance of $300 per month and is paid 8% vacation pay on hours worked. She also is receiving a $973.45 cash reimbursement of travel expenses incurred for the company last month. During this pay cycle Sophie worked 40 hours in the first week and 35 hours in the second. Calculate Sophie’s gross earnings for this pay cycle. Ans: Type of Wage

Calculation

Regular

37.5 hours in Week 1 and 35 hours in Wee

Overtime

(40­37.5) = 2.5 hours in Week 1 $30 x 1.5 = $45 x 2.5 hours

Car Allowance

$300 x 12 ÷ 26

Vacation Pay

8% of ($2,175.00 + 112.50 = $2,287.50)

Expense Reimbursement

Not paid through payroll


Gross Earnings

Learning Objective: 03­01, 03­02, 03­03 Topic: 03­04 Topic: 03­06 Topic: 03­14 Difficulty: Difficult File: Chapter 05 Test Bank True/False [QUESTION] 1. Employees do not need to be notified when court order with­holdings are requested since they should be aware of the situation already. Ans: False Learning Objective: 05­01 Topic: 05­01 Difficulty: Easy Accessibility: Keyboard Navigation [QUESTION] 2. Employers should maintain documentation showing that employees have accepted any required non­statutory deductions.


Ans: True Learning Objective: 05­01 Topic: 05­01 Difficulty: Easy Accessibility: Keyboard Navigation [QUESTION] 3. Finding out that an employee has an outstanding court order related to unpaid debts can be upsetting to the employer and is grounds for termination of employment. Ans: False Learning Objective: 05­01 Topic: 05­02 Difficulty: Moderate Accessibility: Keyboard Navigation


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