Comprehensive and Detailed Explanation:

Independent contractors do NOT receive a salary. They:

Invoice for services rendered rather than receiving fixed wages.

Risk profit or loss (Option B) based on how they manage expenses.

Can hire assistants (Option C) to help complete tasks.

Can end the relationship at any time (Option D) unless bound by a contract.

Option A (Receive a salary) is incorrect because salaries are paid only to employees, not independent

contractors.

Reference:

IRS – Independent Contractor vs. Employee Classification

Payroll.org – Guidelines for Contractor Payments and Taxation

Comprehensive and Detailed Explanation:

Active listening is an essential payroll communication skill that ensures employees receive accurate

information.

Option A (Affirming verbally) → Shows understanding and engagement.

Option C (Paraphrasing the discussion) → Ensures clarity and accuracy.

Option D (Asking open-ended questions) → Encourages better dialogue.

Option B (Interjecting an opinion) is incorrect because it can disrupt communication and cause

misunderstandings.

Reference:

Payroll.org – Customer Service and Communication Best Practices

HR Compliance Training – Effective Workplace Communication

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.

Reference:

GAAP Accounting Principles – Normal Account Balances

Payroll.org – Payroll Accounting Basics

Comprehensive and Detailed Explanation:

A Service Level Agreement (SLA) (Option B) outlines the expected response times and resolution

times for payroll inquiries, ensuring efficient service delivery.

Option A (General Service Contract) is incorrect because it governs third-party payroll providers, not

internal payroll responses.

Option C (Standards of Excellence) is incorrect because it refers to broad performance benchmarks

rather than defined service times.

Option D (Time Management) is incorrect because it focuses on individual productivity, not service

expectations.

Reference:

Payroll.org – Payroll Service Level Agreements Best Practices

HR Compliance Guide – Payroll Inquiry Handling

Comprehensive and Detailed Explanation:

The tax deposit liability includes federal income tax withholding (FITW), Social Security tax, and

Medicare tax.

Social Security Tax:

Employer & Employee each pay 6.2% on $40,000

$40,000 × 6.2% × 2 = $4,960.00

Medicare Tax:

Employer & Employee each pay 1.45% on $35,000

$35,000 × 1.45% × 2 = $1,015.00

Total Tax Deposit Liability:

$2,000 (FITW) + $4,960 (Social Security) + $1,015 (Medicare) = $7,975.00

Thus, the correct answer is A. $7,975.00.

Reference:

IRS Publication 15 – Employer's Tax Guide

Payroll.org – Payroll Tax Calculation Best Practices

Comprehensive and Detailed Explanation:

The priority order for wage attachments is as follows:

Bankruptcy orders (Option A) – Court-ordered payments under the U.S. Bankruptcy Code take top

priority over all other wage deductions.

Child support (Option B) – The second-highest priority under federal law, governed by the Consumer

Credit Protection Act (CCPA).

State tax levies (Option C) – Third in priority, varies by state.

Wage assignments (Option D) – Lowest priority, usually voluntary agreements by employees.

Reference:

Consumer Credit Protection Act (CCPA) – Wage Garnishment Priorities

Payroll.org – Wage Garnishment Guidelines

Comprehensive and Detailed Explanation:

If an employer over-withholds federal taxes from an employee's paycheck, the employer can file an

adjustment using Form 941-X (Adjusted Employer's Quarterly Federal Tax Return).

Form 941 (Option A) is incorrect because it is used to report current payroll taxes, not to correct past

errors.

Form W-2 (Option C) is incorrect because it reports wages and taxes withheld but does not allow

corrections.

Form W-4 (Option D) is incorrect because it is used by employees to adjust withholding allowances.

Reference:

IRS – Instructions for Form 941-X

Payroll.org – Payroll Tax Adjustments and Corrections

Comprehensive and Detailed Explanation:

Payroll reconciliation ensures that payroll transactions match financial records to avoid errors in tax

deposits, employee payments, and financial reporting.

The correct answer includes all necessary reconciliation points:

Accounts payable payments (ensure wages were paid)

End-of-the-month balances (cross-check payroll liabilities)

General ledger entries (confirm correct postings)

Payroll register (check against wage statements)

Option A is incorrect because payroll must also be reconciled with accounts payable and monthly

balances.

Option B & C are incorrect because they exclude payroll register validation.

Reference:

Payroll.org – Payroll Reconciliation Best Practices

IRS – Employer's Tax Guide (Publication 15)

Comprehensive and Detailed Explanation:

State Unemployment Tax Act (SUTA) liability is determined based on where an employee works and

receives direction from, not necessarily where a company is incorporated.

The key factors for determining SUTA state include:

Base of Operations (Option A) – Where the employee works.

Employee’s Residency (Option B) – If an employee works in multiple states, residency may be

considered.

Place of Direction or Control (Option C) – The state where the employer manages and directs the

employee.

Option D (State of Incorporation) is incorrect because SUTA is determined by work location, not

company registration.

Reference:

U.S. Department of Labor – SUTA Tax Reporting Rules

Payroll.org – State Unemployment Tax Guidelines

Comprehensive and Detailed Explanation:

Employers must report unclaimed wages to the state according to escheatment laws. Required

information includes:

Last Known Address (A) – To help locate the employee.

Full Name (B) – To identify the rightful owner.

Payment Amount & Date (D) – To track the missing wages.

Option C (Date of Birth) is NOT required in most state reporting systems, as name and address are

sufficient for identification.

Reference:

State Escheatment Laws – Unclaimed Wages

Payroll.org – Handling and Reporting Unclaimed Wages