- (Topic 1)
Which of the following account types has a normal debit balance?

Correct Answer:A
Comprehensive and Detailed Explanation:In accounting, anormal balancerefers to theside (debit or credit) that increases the account balance.
✑ Assets (Option A) normally have a debit balancebecause they representresources
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 representsowner??s
equity. Reference:
GAAP Accounting Principles – Normal Account Balances Payroll.org – Payroll Accounting Basics

- (Topic 2)
Proper documentation of policies and procedures ensures:

Correct Answer:D
✑ Proper documentationensures uniformityin payroll and HR operations bystandardizing processes.
✑ Conformity (C)refers to compliance but does not guarantee process
standardization.
✑ Responsibility (A) and adaptability (B)are important but not the primary reason for documentation.
References:
✑ Payroll Process Standardization Guide (Payroll.org)

- (Topic 2)
Workers?? compensation payments are excluded from gross income and employment taxes EXCEPT when the amounts received:

Correct Answer:B
✑ Workers?? compensation benefits are tax-exempt if they are paid for work-related injuries or illnesses.
✑ If payments are received for non-work-related illnesses (B), they become taxable.
✑ Amounts that do not exceed federal or state limits (C & D) remain tax-exempt. References:
✑ IRS Publication 525 (Taxable and Nontaxable Income)

- (Topic 2)
Depositors that fail to deposit the entire amount of tax required by the due date, without reasonable cause for the failure, are subject to a failure-to-deposit penalty of 5% of the undeposited amount if it is:

Correct Answer:B
✑ The IRS assesses failure-to-deposit penalties based on the length of the delay:
References:
✑ IRS Deposit Penalty Guidelines (Publication 15)

- (Topic 1)
Which form is used by third-party administrators to report sick pay paid on behalf of an employer?

Correct Answer:C
Comprehensive and Detailed Explanation:Form 8922, Third-Party Sick Pay Recap,is used when athird-party administrator (TPA)payssick payon behalf of an employer and needs toreport taxable wages properly.
✑ This ensures thatSocial Security, Medicare, and FUTA taxesare correctly allocated
between theemployer and third party.
✑ Sick pay is subject to FICA taxes, butnot always subject to FUTAif paid directly by an insurer.
✑ Option A (Form 941)is incorrect because it is used forquarterly payroll tax filings.
✑ Option B (Form 1099)is incorrect becausesick pay is reported on W-2, not 1099.
✑ Option D (Form 1095-B)is incorrect because it relates tohealth coverage reporting.
Reference:
IRS Form 8922 Instructions – Third-Party Sick Pay Recap Payroll.org – Sick Pay Taxation Guidelines

- (Topic 1)
Payroll standard operating procedures should be updated no less frequently than:

Correct Answer:C
Comprehensive and Detailed Explanation:PayrollStandard Operating Procedures (SOPs)must beregularly updatedto maintain compliance and accuracy.
✑ Best practice is to update SOPs whenever workflows change(Option C).
✑ Option A (Annually)is incorrect becausewaiting a full yearcould lead to outdated procedures.
✑ Option B (Quarterly)is incorrect unless payroll processes are highly dynamic.
✑ Option D (When management changes)is incorrect becauseprocesses may change independently of leadership changes.
Reference:
Payroll.org – Payroll Policies and Procedures Best Practices IRS – Payroll Compliance Guidelines