Are flashcards effective for the FPC exam?

Yes. Flashcards use active recall — retrieving an answer from memory — which research shows is one of the most effective ways to make information stick, especially for the many forms, tax rates, and payroll rules the FPC exam tests.

What topics do the FPC flashcards cover?

All 7 content domains: Core Payroll Concepts, Compliance/Research & Resources, Calculation of the Paycheck, Payroll Process & Supporting Systems, Payroll Administration & Management, Audits, and Accounting.

How should I study with these flashcards?

Mix the modes: flip to learn, type to test recall, match for speed, and quiz to check yourself. Start early, review daily, and spend the most time on Core Payroll Concepts and Calculation of the Paycheck — together over half the exam.

Are the FPC flashcards free?

Yes — 100% free, all four study modes, no paywall.

1.5× the regular rate for hours worked over 40 in a workweek (non-exempt employees).

Federal Insurance Contributions Act — Social Security (6.2%) + Medicare (1.45%) = 7.65%, paid by both employee and employer.

Take-home pay — gross pay minus all taxes and deductions.

Total earnings before any deductions: wages, overtime, bonuses, commissions, and other compensation.

Employee's Withholding Certificate — tells the employer how much federal income tax to withhold.

Wage and Tax Statement — reports an employee's annual wages and withholdings; given to the employee and the SSA.

Exempt vs. non-exempt

Exempt employees are not entitled to FLSA overtime; non-exempt employees must receive overtime over 40 hours/week.

Fair Labor Standards Act — federal law setting minimum wage, overtime, recordkeeping, and child-labor standards.

$7.25/hour (federal). Many states and cities set a higher minimum; the employer pays the higher rate.

A fixed, recurring period of 168 hours (7 consecutive 24-hour days). Overtime is figured per workweek, not per pay period.

Wages are taxable when made available to the employee without restriction, even if not yet physically received.

Compensation is treated as paid when set apart and available to the employee without substantial limitation.

Employee (common-law)

A worker whose employer controls what work is done and how it is done; receives a W-2 and has taxes withheld.

Independent contractor

A self-employed worker who controls how the work is done; receives Form 1099-NEC and pays self-employment tax.

Three categories of evidence for worker status: behavioral control, financial control, and the relationship of the parties.

Nonemployee Compensation — reports $600+ paid to an independent contractor during the year.

Employment Eligibility Verification — confirms a new hire's identity and authorization to work in the U.S.

Application for an Employer Identification Number (EIN), the employer's federal tax ID.

Application for a Social Security card / number, used to obtain or correct an SSN.

Exempt employee tests

To be exempt from overtime, an employee must meet a salary-basis test, a salary-level test, and a duties test.

FLSA exempt salary level

The currently enforced standard salary level is $684/week ($35,568/year); the 2024 increase was vacated by a court.

An exempt employee receives a predetermined, fixed salary that is not reduced for variations in quality or quantity of work.

White-collar exemptions

Executive, Administrative, Professional, Outside Sales, and certain Computer employees may be exempt from FLSA overtime.

Pay left after legally required deductions (taxes) — the base for calculating most garnishments.

A court- or agency-ordered deduction from an employee's pay to satisfy a debt, such as child support or a tax levy.

CCPA garnishment limits

The Consumer Credit Protection Act caps how much pay can be garnished and protects employees from being fired for one garnishment.

Child support priority

Child-support withholding orders generally take priority over other garnishments and can reach a higher percentage of pay.

Pay other than regular wages — bonuses, commissions, severance, overtime — that may be taxed by the flat or aggregate method.

Calculating a higher gross so that, after taxes are withheld, the employee nets a specific target amount.

Non-cash compensation (e.g., personal use of a company car); taxable unless specifically excluded by the IRC.

De minimis fringe benefit

A benefit so small that accounting for it is unreasonable or impractical — excluded from taxable wages.

Cafeteria plan (Section 125)

A plan letting employees choose pre-tax benefits (health premiums, FSA), reducing taxable wages.

A deduction taken before tax is calculated, lowering taxable wages (e.g., traditional 401(k), Section 125 health premiums).

A deduction taken from pay already taxed (e.g., Roth 401(k), garnishments, union dues).

Employer Identification Number — the IRS-issued number that identifies a business for payroll tax purposes.

A related corporation that pays employees of multiple group members, avoiding duplicate Social Security on shared employees.

A worker treated as an employee for FICA but who may report income on Schedule C (e.g., certain drivers, salespeople).

An employee who customarily receives more than $30/month in tips; a tip credit may apply toward minimum wage.

Employers must report new and rehired employees to the state directory, mainly to enforce child-support orders.

Rules limiting the hours and types of work for minors; stricter for those under 16.

Time that must be paid — including certain training, travel, and on-call time, under FLSA rules.

Requires prevailing wages on federal construction contracts over $2,000.

Sets labor standards (minimum wage, overtime, safety) for federal supply contracts over $10,000.

Requires prevailing wages and fringe benefits on federal service contracts over $2,500.

Family and Medical Leave Act — up to 12 weeks of unpaid, job-protected leave for eligible employees; affects pay continuity.

Protects the reemployment and benefit rights of employees who serve in the military.

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FLSA overtime rate: 1.5× the regular rate for hours worked over 40 in a workweek (non-exempt employees).
FICA: Federal Insurance Contributions Act — Social Security (6.2%) + Medicare (1.45%) = 7.65%, paid by both employee and employer.
Net pay: Take-home pay — gross pay minus all taxes and deductions.
Gross pay: Total earnings before any deductions: wages, overtime, bonuses, commissions, and other compensation.
Form W-4: Employee's Withholding Certificate — tells the employer how much federal income tax to withhold.
Form W-2: Wage and Tax Statement — reports an employee's annual wages and withholdings; given to the employee and the SSA.
Exempt vs. non-exempt: Exempt employees are not entitled to FLSA overtime; non-exempt employees must receive overtime over 40 hours/week.
FLSA: Fair Labor Standards Act — federal law setting minimum wage, overtime, recordkeeping, and child-labor standards.
Federal minimum wage: $7.25/hour (federal). Many states and cities set a higher minimum; the employer pays the higher rate.
Workweek (FLSA): A fixed, recurring period of 168 hours (7 consecutive 24-hour days). Overtime is figured per workweek, not per pay period.
Constructive receipt: Wages are taxable when made available to the employee without restriction, even if not yet physically received.
Constructive payment: Compensation is treated as paid when set apart and available to the employee without substantial limitation.
Employee (common-law): A worker whose employer controls what work is done and how it is done; receives a W-2 and has taxes withheld.
Independent contractor: A self-employed worker who controls how the work is done; receives Form 1099-NEC and pays self-employment tax.
IRS common-law test: Three categories of evidence for worker status: behavioral control, financial control, and the relationship of the parties.
Form 1099-NEC: Nonemployee Compensation — reports $600+ paid to an independent contractor during the year.
Form I-9: Employment Eligibility Verification — confirms a new hire's identity and authorization to work in the U.S.
Form SS-4: Application for an Employer Identification Number (EIN), the employer's federal tax ID.
Form SS-5: Application for a Social Security card / number, used to obtain or correct an SSN.
Exempt employee tests: To be exempt from overtime, an employee must meet a salary-basis test, a salary-level test, and a duties test.
FLSA exempt salary level: The currently enforced standard salary level is $684/week ($35,568/year); the 2024 increase was vacated by a court.
Salary-basis test: An exempt employee receives a predetermined, fixed salary that is not reduced for variations in quality or quantity of work.
White-collar exemptions: Executive, Administrative, Professional, Outside Sales, and certain Computer employees may be exempt from FLSA overtime.
Disposable earnings: Pay left after legally required deductions (taxes) — the base for calculating most garnishments.
Wage garnishment: A court- or agency-ordered deduction from an employee's pay to satisfy a debt, such as child support or a tax levy.
CCPA garnishment limits: The Consumer Credit Protection Act caps how much pay can be garnished and protects employees from being fired for one garnishment.
Child support priority: Child-support withholding orders generally take priority over other garnishments and can reach a higher percentage of pay.
Supplemental wages: Pay other than regular wages — bonuses, commissions, severance, overtime — that may be taxed by the flat or aggregate method.
Grossing up: Calculating a higher gross so that, after taxes are withheld, the employee nets a specific target amount.
Fringe benefits: Non-cash compensation (e.g., personal use of a company car); taxable unless specifically excluded by the IRC.
De minimis fringe benefit: A benefit so small that accounting for it is unreasonable or impractical — excluded from taxable wages.
Cafeteria plan (Section 125): A plan letting employees choose pre-tax benefits (health premiums, FSA), reducing taxable wages.
Pre-tax deduction: A deduction taken before tax is calculated, lowering taxable wages (e.g., traditional 401(k), Section 125 health premiums).
Post-tax deduction: A deduction taken from pay already taxed (e.g., Roth 401(k), garnishments, union dues).
EIN: Employer Identification Number — the IRS-issued number that identifies a business for payroll tax purposes.
Common paymaster: A related corporation that pays employees of multiple group members, avoiding duplicate Social Security on shared employees.
Statutory employee: A worker treated as an employee for FICA but who may report income on Schedule C (e.g., certain drivers, salespeople).
Tipped employee: An employee who customarily receives more than $30/month in tips; a tip credit may apply toward minimum wage.
New-hire reporting: Employers must report new and rehired employees to the state directory, mainly to enforce child-support orders.
FLSA child labor: Rules limiting the hours and types of work for minors; stricter for those under 16.
Compensable time: Time that must be paid — including certain training, travel, and on-call time, under FLSA rules.
Davis-Bacon Act: Requires prevailing wages on federal construction contracts over $2,000.
Walsh-Healey Act: Sets labor standards (minimum wage, overtime, safety) for federal supply contracts over $10,000.
Service Contract Act: Requires prevailing wages and fringe benefits on federal service contracts over $2,500.
FMLA: Family and Medical Leave Act — up to 12 weeks of unpaid, job-protected leave for eligible employees; affects pay continuity.
USERRA: Protects the reemployment and benefit rights of employees who serve in the military.
Title VII / EEO: Prohibits employment discrimination; relevant to equal pay and recordkeeping.
Equal Pay Act: Requires equal pay for equal work regardless of sex within the same establishment.
Comp time: Paid time off given instead of overtime cash — allowed only for public-sector employees under the FLSA.
Severance pay: Compensation paid on termination; treated as supplemental wages for withholding.
Holiday / premium pay: Extra pay for holidays is a matter of policy, not FLSA — but it must be included in the regular rate if nondiscretionary.
Form W-2c: Corrected Wage and Tax Statement — used to fix an error on a previously filed W-2.
Form W-4P / W-4R: Withholding certificates for pension/annuity payments and nonperiodic distributions.
Nonqualified deferred comp: Compensation deferred under a nonqualified plan; special FICA timing (special-timing rule) applies.
HSA: Health Savings Account — pre-tax contributions (with a high-deductible plan) that reduce taxable wages.
FSA: Flexible Spending Account — pre-tax salary set aside for medical or dependent-care expenses.
Dependent care assistance: Up to $5,000/year of employer dependent-care benefits may be excluded from taxable wages.
Adoption assistance: Employer-provided adoption help is excludable from income tax (but subject to FICA) up to a limit.
Educational assistance (Sec. 127): Up to $5,250/year of employer education aid is excludable from taxable wages.
Accountable plan: An expense-reimbursement plan meeting IRS rules so reimbursements are not taxable wages.
Nonaccountable plan: An expense-reimbursement arrangement that fails the IRS rules — payments are taxable wages.
Form 941: Employer's Quarterly Federal Tax Return — reports wages, withheld income tax, and both shares of FICA each quarter.
Form 940: Employer's Annual Federal Unemployment (FUTA) Tax Return — filed once a year.
Form 944: Annual federal tax return for the smallest employers (under ~$1,000 in annual liability), filed instead of quarterly 941s.
Form W-3: Transmittal of Wage and Tax Statements — the summary that accompanies all W-2s sent to the SSA.
Form 945: Annual Return of Withheld Federal Income Tax — for non-payroll withholding (e.g., backup withholding, pensions).
EFTPS: Electronic Federal Tax Payment System — the IRS's free system employers use to deposit federal payroll taxes electronically.
Monthly depositor: An employer with $50,000 or less in lookback-period tax liability; deposits by the 15th of the following month.
Semiweekly depositor: An employer with more than $50,000 in lookback liability; deposits Wed or Fri depending on payday.
Lookback period: The 12-month period (July 1–June 30) used to set whether an employer is a monthly or semiweekly depositor.
$100,000 next-day rule: If accumulated tax liability reaches $100,000, the deposit is due by the next business day.
FUTA tax: Federal Unemployment Tax — 6.0% on the first $7,000 of each employee's wages, reduced to 0.6% with the state credit.
SUTA: State Unemployment Tax Act — state unemployment tax, usually employer-paid, at an experience-rated rate on a state wage base.
SUTA dumping: An illegal scheme to manipulate experience rating (e.g., shifting payroll to a low-rate entity) to lower unemployment tax.
Experience rating: A state's method of setting an employer's SUTA rate based on its history of unemployment claims.
FUTA credit reduction: When a state has not repaid federal unemployment loans, employers there lose part of the FUTA credit and pay more.
Recordkeeping (FLSA): Payroll records must generally be kept at least 3 years; records used to compute pay (time cards) at least 2 years.
IRS recordkeeping: Employment tax records must be kept at least 4 years after the tax becomes due or is paid, whichever is later.
Form W-2 due date: W-2s are due to employees and to the SSA by January 31 of the following year.
Form 941 due dates: Filed by the last day of the month after each quarter (Apr 30, Jul 31, Oct 31, Jan 31).
Backup withholding: A flat federal withholding (24%) on certain payments when a payee fails to furnish a correct TIN.
IRC: Internal Revenue Code — the federal statute governing federal income tax and employment tax.
Circular E (Pub. 15): The IRS Employer's Tax Guide — the primary reference for federal withholding rules and deposit rules.
Form W-9: Request for Taxpayer Identification Number — collected from contractors to support 1099 reporting.
Penalty for late deposit: A graduated penalty (2%–15%) based on how many days late an employment-tax deposit is.
Trust fund taxes: Income tax and the employee share of FICA the employer holds 'in trust' for the government before remitting.
Trust Fund Recovery Penalty: A 100% penalty the IRS can assess on responsible persons who willfully fail to remit trust-fund taxes.
ACA reporting (1095-C): Applicable large employers report offers of health coverage on Form 1095-C.
State income tax withholding: Most states require employers to withhold state income tax, using state-specific tables and forms.
Reciprocity agreement: An agreement letting an employee pay income tax to the home state instead of the work state.
Garnishment compliance: Employers must honor valid withholding orders, remit on time, and follow CCPA limits to avoid liability.
Statute of limitations (refund): Generally 3 years from filing to claim an employment-tax refund or correction.
Form 1096: Annual Summary and Transmittal of U.S. Information Returns — the paper transmittal for 1099s sent to the IRS.
Form 941-X: Adjusted Employer's Quarterly Federal Tax Return — corrects errors on a previously filed Form 941.
Form W-2 box 1 vs 3: Box 1 = federal taxable wages (after pre-tax FIT items); Box 3 = Social Security wages (capped at the wage base).
Pub. 15-T: Federal Income Tax Withholding Methods — the IRS guide with the percentage and wage-bracket withholding tables.
Pub. 15-B: Employer's Tax Guide to Fringe Benefits — explains which fringe benefits are taxable.
State new-hire deadline: Most states require new-hire reports within 20 days of hire (some sooner) to the state directory.
Multi-state taxation: An employee working in multiple states may owe tax in more than one; rules and reciprocity vary by state.
Wage and hour exposure: FLSA violations (unpaid overtime, misclassification) can mean back pay plus liquidated damages.
Regular rate of pay: All compensation for the workweek (including most bonuses) divided by total hours worked — the base for overtime.
Overtime premium: The extra half-time owed on overtime hours: 0.5 × regular rate × overtime hours, on top of straight time.
Salaried non-exempt overtime: Convert salary to an hourly regular rate, then pay 1.5× that rate for hours over 40.
Percentage method: A federal income tax withholding method using formulas and the W-4 — works for any wage amount, used by software.
Wage-bracket method: A federal income tax withholding method that reads tax directly from IRS tables by wage range and W-4 status.
Flat rate on supplemental wages: Optional 22% federal withholding on supplemental wages paid separately from regular wages (37% over $1 million).
Aggregate method: Withholding on supplemental wages by combining them with regular wages and taxing the total per the W-4.
Social Security tax (employee): 6.2% of wages up to the annual wage base; the employer matches it.
Medicare tax (employee): 1.45% of all wages with no wage limit; the employer matches it.
Additional Medicare Tax: An extra 0.9% withheld on employee wages over $200,000; employee only, no employer match.
2026 Social Security wage base: $184,500 — the maximum wages subject to the 6.2% Social Security tax in 2026 (SSA).
2025 Social Security wage base: $176,100 — the maximum wages subject to Social Security tax in 2025 (SSA).
Taxable wages vs. gross: Taxable wages = gross pay minus pre-tax deductions; each tax (FIT, SS, Medicare) can have a slightly different base.
Imputed income: The value of a non-cash benefit added to taxable wages (e.g., group-term life over $50,000, personal car use).
Group-term life over $50,000: Employer-paid coverage above $50,000 creates imputed income taxed for income tax and FICA (not federal income tax withholding required, but FICA applies).
401(k) deferral limit: The employee elective deferral limit is $24,500 (2026, IRS), plus an age-50 catch-up of $8,000.
2026 standard mileage rate: $0.725/mile for business use (IRS, 2026) — used for accountable-plan reimbursements.
Pre-tax 401(k) effect: Reduces federal (and usually state) taxable wages, but is still subject to Social Security and Medicare tax.
Roth 401(k) effect: After-tax: it does NOT reduce taxable wages; qualified withdrawals are tax-free.
Section 125 health premiums: Pre-tax under a cafeteria plan — reduce wages for income tax AND for Social Security and Medicare.
Garnishment disposable earnings: Gross pay minus legally required deductions (taxes) — NOT minus voluntary deductions like 401(k).
Tip credit: Lets an employer count a limited amount of tips toward the minimum-wage obligation for tipped employees.
Shift differential: Extra pay for working less desirable shifts; included in the regular rate for overtime.
On-call pay: Pay for time an employee must be available; may be compensable depending on the restrictions imposed.
Retroactive pay: Wages owed for a past period (e.g., a delayed raise); taxed when paid, often as supplemental wages.
Bonus in regular rate: Nondiscretionary bonuses must be added back into the regular rate, increasing overtime due.
Discretionary bonus: A bonus the employer is not contractually obligated to pay; excluded from the regular rate.
Weighted-average overtime: When an employee works at two rates, overtime is based on the blended (weighted-average) regular rate.
Tax levy (federal): An IRS levy on wages; the exempt amount is based on filing status and standard deduction, not CCPA limits.
Net-to-gross (gross-up): Solve gross from a desired net by dividing the net by (1 − total tax rate).
Rounding for time: The 7-minute rule: time may be rounded to the nearest quarter hour if it averages out fairly over time.
Federal income tax (FIT): Withheld using the employee's Form W-4 and IRS Pub. 15-T (percentage or wage-bracket method).
Multiple worksite overtime: Hours at all of one employer's locations in a workweek combine for the 40-hour overtime threshold.
Maximum garnishment (CCPA): Generally the lesser of 25% of disposable earnings or the amount over 30× the federal minimum wage.
Cafeteria plan & FICA: Most Section 125 elections are exempt from FICA; 401(k) deferrals are NOT exempt from FICA.
HCE overtime threshold: A highly compensated employee earning at least $107,432/year can be exempt with only a minimal duties test.
Annualized vs. cumulative: Withholding methods differ: most use the per-period (annualized) approach; the cumulative method smooths uneven pay.
Hours-worked rounding: Time may be rounded (e.g., nearest ¼ hour) only if the practice averages out and does not consistently shortchange employees.
Workweek for salaried: A salaried non-exempt employee's regular rate = weekly salary ÷ hours the salary is intended to cover.
Pay-period proration: Splitting an annual salary across pay periods (annual ÷ number of pays) to find period pay.
Tax on bonuses (combined): If supplemental and regular wages are paid together, withhold as if one total (aggregate method).
Time and attendance system: Software that captures hours worked, feeding gross-pay calculation and reducing manual error.
Payroll register: A report listing each employee's earnings, deductions, taxes, and net pay for a pay period.
Pay cut-off date: The deadline for submitting time data so payroll can be processed on schedule.
Direct deposit (ACH): Electronic transfer of net pay to an employee's bank account via the ACH network.
Paycard: A reloadable debit card used to pay employees who lack a bank account; subject to fee disclosure rules.
Pay statement (stub): A record of earnings, deductions, and net pay; required in most states each payday.
HRIS: Human Resource Information System — integrates HR data (employees, benefits) with payroll.
Interface / integration: Linking systems (time, HR, GL) so data flows automatically and is not re-keyed.
Batch processing: Running a group of transactions (a full payroll) together at scheduled times.
Parallel testing: Running a new payroll system alongside the old one to confirm identical results before go-live.
Edit / validation checks: Automated rules that flag out-of-range or missing data before payroll is finalized.
Master file: Stored standing data for each employee (rate, status, deductions) used every payroll.
Payroll calendar: The schedule of pay periods, paydays, cut-offs, and deposit due dates.
Pay frequency: How often employees are paid: weekly, biweekly, semimonthly, or monthly.
Biweekly vs. semimonthly: Biweekly = 26 pays/year (every 2 weeks); semimonthly = 24 pays/year (twice a month, e.g., 15th & last).
System access controls: User permissions and authentication that limit who can view or change payroll data.
Disaster recovery / backup: Plans and copies that let payroll continue after a system failure or outage.
Self-service portal: A system letting employees view pay stubs, update W-4s, and change direct deposit themselves.
Outsourcing / PSP: Using a Payroll Service Provider to process payroll; the employer usually retains tax-liability responsibility.
PEO: Professional Employer Organization — a co-employment arrangement that handles payroll and HR under its own EIN.
Reporting agent (Form 8655): An authorized third party that signs and files payroll tax returns and makes deposits for the employer.
General ledger interface: The link that posts payroll totals into the accounting system's GL accounts.
Data conversion: Migrating employee and history data when implementing a new payroll system.
Audit trail (system): A log of who changed what and when, supporting control and investigation.
Implementation phases: Typical project stages: planning, design, build, test (parallel), train, go-live, and support.
Off-cycle / manual check: A payment made outside the normal payroll run to correct an error or pay a termination.
Escheatment of paychecks: Unclaimed wages must be turned over to the state after a dwell period (unclaimed property law).
Positive pay: A bank fraud-control service that matches issued checks against those presented for payment.
ACH return / reversal: Correcting a direct-deposit error by reversing the transaction within the NACHA time limits.
Net pay rounding: Systems must handle penny rounding consistently so the register and GL tie out.
Time clock / biometric: Devices that capture clock-in/out; biometric data may trigger state privacy-law obligations.
Workflow approval: Routing changes (new hire, rate change) to the right approver before they affect pay.
Pay-on-demand / earned wage access: Letting employees access earned wages before payday; must be administered within wage-payment law.
Variance analysis: Comparing actual payroll results to budget or prior periods to spot and explain differences.
Payroll benchmarking: Comparing payroll metrics (cost, error rate, cycle time) against peers or standards.
Key performance indicator (KPI): A measurable metric (e.g., payroll accuracy %, on-time pay %) used to manage performance.
Service level agreement (SLA): A documented commitment to a service standard (e.g., 99% on-time pay) between payroll and stakeholders.
Customer service (internal): Treating employees and departments as customers; timely, accurate answers build trust in payroll.
Confidentiality: Payroll data is highly sensitive; access must be restricted and privacy laws followed.
Process documentation: Written procedures (the payroll calendar, checklists, desk procedures) that ensure consistency and continuity.
Cross-training: Training multiple staff on payroll tasks so the function continues if someone is absent.
Global / multinational payroll: Paying workers across countries — must address local tax, currency, and labor law differences.
Selecting a payroll system: Match features to needs: compliance, scalability, integration, support, and total cost of ownership.
Vendor management: Overseeing third-party providers against contracts and SLAs, including data security.
Change management: Managing the people side of process or system change to gain adoption and reduce disruption.
Continuous improvement: Regularly refining payroll processes to cut errors, time, and cost.
Project management: Planning, scheduling, and controlling work (e.g., a system implementation) to meet goals.
Data security / cybersecurity: Protecting payroll data with encryption, access controls, and breach-response plans.
Phishing / W-2 scam: Fraudulent requests for W-2 or payroll data; staff training is the primary defense.
Policy and procedure: Internal rules (overtime approval, expense reimbursement) that govern how payroll operates.
Stakeholder communication: Keeping HR, finance, and employees informed of payroll changes and deadlines.
Retention of staff knowledge: Documenting tribal knowledge so expertise isn't lost when employees leave.
Cost of payroll errors: Errors cause overpayments, penalties, rework, and lost trust — measured and minimized.
Budgeting for payroll: Forecasting labor cost, taxes, and benefits for the financial plan.
Management reporting: Summaries (labor cost by department, headcount) that inform business decisions.
RCH (recertification credit hour): A clock hour of approved payroll education; the FPC requires 60 RCHs over 3 years to recertify.
Professional development: Ongoing payroll education (PayrollOrg courses, conferences) that keeps skills and certification current.
Mission / service standards: Defined goals (accuracy, timeliness) that guide how the payroll department operates.
Record retention policy: A written schedule stating how long each payroll record is kept, per FLSA and IRS rules.
Disaster / continuity plan: A documented plan to keep paying employees during a disruption.
Payroll audit: A review verifying that pay, taxes, and deductions are accurate, authorized, and compliant.
Internal controls: Procedures (segregation of duties, approvals, reconciliations) that prevent and detect errors and fraud.
Segregation of duties: Splitting tasks (hiring, time entry, pay approval, distribution) so no one person controls a whole transaction.
Audit trail: A traceable record of every transaction and change, letting an auditor follow the flow.
Reconciliation: Matching one record to another (payroll register to GL, 941 to W-2s) to confirm agreement.
Quarterly reconciliation (941): Confirming the four 941s' totals tie to the year's W-2/W-3 wages and taxes.
Year-end reconciliation: Verifying total wages, withholdings, and deposits agree across 941s, W-2s, W-3, and the GL before filing.
Ghost employee: A fake employee added to payroll to divert pay — a classic fraud internal controls aim to prevent.
Phantom hours: Hours not actually worked entered to inflate pay — detected by approval and review controls.
SOX (Sarbanes-Oxley): Requires public companies to maintain and attest to effective internal controls over financial reporting, including payroll.
Substantive testing: Detailed checks of transactions and balances to confirm amounts are correct.
Sampling: Examining a representative subset of transactions to draw conclusions about the whole population.
Compliance audit: A review confirming payroll follows laws and regulations (FLSA, tax deposits, garnishments).
Workers' comp audit: An insurer's review of payroll by class code to set the correct workers' compensation premium.
I-9 audit: A review of Form I-9s for completeness and compliance, often triggered by ICE.
Self-audit: Payroll's own periodic review to catch errors before an external auditor or agency does.
Documentation / evidence: Source records (time cards, authorizations, returns) that support audited amounts.
Authorization control: Requiring proper approval (for new hires, rate changes, overtime) before changes take effect.
Bank reconciliation (payroll account): Matching the payroll bank account to records to find unclaimed or duplicate checks.
Exception report: A report listing items outside normal parameters (e.g., negative net pay) for review.
Risk assessment: Identifying where payroll is most exposed to error or fraud to focus controls and audits.
Internal vs. external audit: Internal auditors work for the company; external auditors are independent and report to stakeholders.
Materiality: The threshold at which an error is large enough to influence a decision — guides audit focus.
Walkthrough: Tracing one transaction through the whole process to confirm controls work as described.
941-to-W-2 reconciliation: Confirming the sum of the four quarterly 941s equals the annual W-2/W-3 totals.
Negative-net-pay check: An exception review flagging any paycheck where deductions exceed gross pay.
Debit and credit: Double-entry rule: every entry has equal debits and credits; debits increase assets/expenses, credits increase liabilities/revenue/equity.
Payroll journal entry: Records gross wages and employer taxes as expenses (debits) and amounts owed as liabilities/cash (credits).
Salaries & Wages Expense: An expense account, debited for gross pay in the payroll entry.
Payroll Tax Expense: An expense account for the employer's share of FICA, FUTA, and SUTA; appears on the income statement.
Taxes Payable: A liability account for taxes withheld and the employer share, until remitted to the agencies.
Wages Payable / Net Pay Payable: A liability for net pay owed to employees until the checks clear or deposits post.
Accrued payroll: A liability recorded for wages earned but not yet paid at period-end (matching principle).
Matching principle: Expenses are recorded in the same period as the revenue they help generate — so wages accrue when earned.
Accrual accounting: Recording revenue when earned and expenses when incurred, regardless of cash timing.
Cash-basis accounting: Recording revenue and expenses only when cash is received or paid.
Liability account: An account for amounts owed (taxes payable, deductions payable); a credit balance increases it.
Expense account: An account for costs of operating (wages, payroll taxes); a debit balance increases it.
Asset account: An account for resources owned (cash); debited to increase.
General ledger (GL): The master record of all accounts and balances where payroll totals are posted.
Chart of accounts: The organized list of all GL accounts a company uses.
Trial balance: A list of all GL account balances proving total debits equal total credits.
Income statement: Reports revenues and expenses (including wages and payroll taxes) over a period.
Balance sheet: Reports assets, liabilities (e.g., taxes payable), and equity at a point in time.
Reversing entry: An entry that cancels a prior accrual at the start of the next period to avoid double-counting.
Period-end accrual entry: Debit Wages Expense, credit Wages Payable for wages earned but unpaid at period-end.
Recording employer taxes: Debit Payroll Tax Expense; credit the related Taxes Payable liabilities.
Workers' comp accrual: Recording the estimated workers' compensation cost as an expense and liability.
PTO / vacation accrual: Recording earned but unused paid time off as a liability and expense.
Bonus accounting: A bonus is a compensation expense; accrue it when earned, pay (and tax) it when paid.
Normal balance: The side (debit or credit) that increases an account: assets/expenses = debit; liabilities/revenue/equity = credit.
Posting: Transferring journal entries into the individual general-ledger accounts.
Subsidiary ledger: A detailed ledger (e.g., by employee) supporting a control account in the GL.
Cost allocation (labor): Distributing wage and tax expense to departments, jobs, or cost centers.
Employer tax expense entry: Debit Payroll Tax Expense and credit FICA/FUTA/SUTA Payable for the employer's own taxes.
Self-balancing entry: A complete payroll entry whose debits (expenses) equal its credits (liabilities + cash).

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By Career EmployerUpdated Sep 12, 2026

250+ free FPC flashcards — 4 ways to study

FPC Flashcard of the DayNew daily

The classic card. Do you know this one?

Click Study Flashcards above to open the flashcard hub — 250+ FPC cards you can flip, match, type, or quiz yourself on. Every card is drawn from the 7 PayrollOrg content domains, so you study exactly what the exam tests.^[1] Pair them with our free practice test and study guide.

FPC Flashcard Study Modes

Flip mode moves one card at a time, front to back, at whatever pace you set. Match is the timed game that pairs terms with their definitions. Type shows you the definition and asks you to produce the term, so a card like Imputed income has to come back spelled correctly. Quiz rebuilds the same cards as multiple choice for fast self-checks.

Free FPC flashcards from Career Employer — active recall for all 7 payroll domains

Why Flashcards Work for the FPC Exam

Core Payroll Concepts is the largest block at 58 cards, matching its 29% weight on the FPC. These cards drill the statutes, agencies, and identifiers you are expected to recognize on sight, from FLSA and FMLA to USERRA, plus employer and account basics such as EIN, FSA, and Form I-9.

Calculation of the Paycheck carries 44 cards against a 24% weight, and the terms here are the vocabulary behind every pay computation. Expect fronts such as Gross pay and Net pay, wage adjustments like Tip credit, On-call pay, and Retroactive pay, and method language including Overtime premium and Aggregate method.

Compliance, Research & Resources holds 39 cards for 17%. The focus is forms, deposit mechanics, and authority: Form 941, Form 940, and Form 944 sit beside Form W-3 and Form 945, while EFTPS, SUTA, and IRC cover how deposits are made and where the rules come from.

Audits and Accounting are both weighted at 8%, with 26 and 30 cards. The audit cards define the process and its red flags, including Audit trail, Materiality, and Phantom hours, alongside Self-audit and I-9 audit. The accounting cards cover Trial balance, Accrued payroll, Normal balance, and the account types payroll entries touch.

Payroll Process & Supporting Systems, at 33 cards, and Payroll Administration & Management, at 27 cards, are each weighted 7%. The systems cards cover HRIS, Master file, Positive pay, and Paycard, while the management set drills Cross-training, Confidentiality, Variance analysis, and Phishing / W-2 scam.

That matters for the FPC exam, which is dense with forms (W-4, W-2, 941, 940), tax rates (FICA, FUTA), and payroll rules that reward repetition. Used alongside our practice test and study guide, flashcards turn review time into measurable progress.^[3]

FPC Flashcards by Domain

The cards are organized by the 7 PayrollOrg content domains. Weight your study toward the heaviest ones — Core Payroll Concepts and Calculation of the Paycheck are over half the exam:^[1]

FPC flashcards by domain (2026 content outline)
FPC domain	% of exam
Core Payroll Concepts	29%
Calculation of the Paycheck	24%
Compliance / Research & Resources	17%
Audits	8%
Accounting	8%
Payroll Process & Supporting Systems	7%
Payroll Administration & Management	7%

How to Get the Most Out of These Flashcards

Start with the heaviest block. Core Payroll Concepts is 58 cards and 29% of the exam, so the acronyms and statutes there repay early repetition more than any other domain.
Type-drill the acronyms. Cards like FICA and USERRA look easy in Flip mode but expose weak recall the moment you have to produce the term from the definition alone.
Use Match for lookalike pairs. The Accounting terms, where Normal balance, Asset account, and Expense account blur together, sort themselves out fastest under a timed pairing drill.
Switch to the practice test once recall holds. When Quiz mode on Core Payroll Concepts and Calculation of the Paycheck stops surprising you, move to scored questions and use the study guide for gaps.
Work in domain-sized sittings. With 257 cards, take one domain per session, then reshuffle the smaller sets, Audits and Payroll Administration & Management, into review days so nothing goes stale.

FPC Flashcards FAQ

Hundreds of free FPC flashcards, organized across all 7 PayrollOrg content domains tested on the exam. They're free to use with no account required.

References

1.PayrollOrg. “Fundamental Payroll Certification (FPC).” PayrollOrg. ↑
2.Internal Revenue Service. “Publication 15 (Circular E), Employer's Tax Guide.” IRS.gov. ↑
3.Institute of Education Sciences (U.S. Dept. of Education). “Organizing Instruction and Study to Improve Student Learning (Practice Guide).” What Works Clearinghouse, IES. ↑

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