I guess the test is only when the person suspects that the PSU is the problem and not any other CPU components. The odd thing about doing the paper clip test is that my cable doesn't indicate which wire is green and black to do any test. The cables I have are complete black.
1. The paper clip test just makes sure the psu is not completely DOA, if it passes it doesnt mean it will be functional when connected to a PC.
2. Hold the 20/24 pin main connector with the clip up, facing you ( like you were going to plug it into your mouth ).
Pin 4 ( top row , from the left ) is the green wire, there is a ground on either side of it.