National Payroll Institute Payroll Fundamentals 1Exam - PF1 Exam Practice Test

Question 1
The capital cost of an employer-owned vehicle includes:

Correct Answer: D
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Question 2
A premium payment for overtime hours worked or a rate per piece of goods produced is an example of:

Correct Answer: B
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Question 3
When would a Record of Employment be issued for an employee paid mainly by commission?

Correct Answer: D
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Question 4
Expense reimbursements are:

Correct Answer: D
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Question 5
An employee has the use of a company-leased vehicle for both business and personal use. This is an example of:

Correct Answer: A
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Question 6
Helen is reimbursed for the cost of the protective clothing that is legally required for her job. The clothing she bought isnot supported by receiptsand is a reasonable reimbursement amount. This is considered:

Correct Answer: B
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Question 7
The authorization for hiring form should contain a checklist to ensure the organization obtains all required information. What is an example of an item that could be on that checklist?

Correct Answer: A
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Question 8
Michael is an employee in Alberta who is paid bi-weekly and earns $1,600.00 per pay period. He has a taxable meal allowance of $30.00 per pay period. His federal and provincial TD1s on file show a claim code
2. Michael already reached the annual maximum first and second Canada Pension Plan (CPP) contributions before this pay. Calculate his total federal and provincial income taxes.
Correct Answer:
(total federal + Alberta tax): $173.48
Explanation:
Taxable gross for the period = $1,600.00 + $30.00 = $1,630.00 (a taxable allowance is included in income for tax withholding).
Using CRA T4032-AB (Biweekly, 26 pay periods) with claim code 2:
Federal tax at pay $1,630 falls in the $1,619-$1,635 range # CC2 = $107.35.
Alberta provincial tax at pay $1,630 falls in the $1,628-$1,644 range # CC2 = $46.55.
Subtotal tax from the tables = $107.35 + $46.55 = $153.90.
CRA notes these tax tables build in the tax credits for CPP/EI, so when CPP is not deducted (because annual max already reached), you must increase tax withholding accordingly.
CPP that would have been deducted this pay (using CRA rates/YBE):
Pensionable = $1,630 # ($3,500/26 = $134.62) = $1,495.38; CPP (4.95% + 1.00% = 5.95%) = $88.98.
Add back missing credits: Federal 14% × 88.98 = $12.46; Alberta 8% × 88.98 = $7.12 # total $19.58.
Final total tax = $153.90 + $19.58 = $173.48.