Question 1

Internal control problems would be likely to result if a company's payroll department supervisor was also responsible for:

Accepted Answer

A) Reviewing authorization forms for new employees. 
B) Comparing the payroll register with the batch transmittal. 
C) Authorizing changes in employee pay rates. 
D) Hiring subordinates to work in the payroll department.

Question 2

Many companies use independent, internet-based service providers to handle their payroll processing.These payroll providers specialize in offering solutions and constant access to payroll information.

Accepted Answer

A) Online Software Systems 
B) Batch Processing 
C) Electronic Timekeeping 
D) Outsourcing of Payroll Services

Question 3

The internal control process of requiring physical controls in place in areas where fixed assets are held, will help to minimize the risk of:

Accepted Answer

A) Incorrect amounts 
B) Lost or stolen assets 
C) Duplicate transactions 
D) Omitted transactions

Question 4

Internal control activities within the payroll process, identified as authorization, would include which of the following?

Accepted Answer

A) Preparation of a bank reconciliation 
B) Independent paymaster 
C) Manager approval of payroll prior to signing checks 
D) Physical controls in areas where cash and paychecks are held

Question 5

This item would include explanations concerning the qualifications and responsibilities of each position shown on organization chart.The item is also supported by policies and procedures manuals that outline specific activities performed by each position.

Accepted Answer

A) Job profile 
B) Human resources listing 
C) Organization chart description 
D) Position description

Question 6

Activities involved with the fixed assets continuance phase of the fixed assets processes include all of the following, except:

Accepted Answer

A) Updating depreciation prior to the disposal of fixed assets 
B) Updating cost data for improvements to assets 
C) Adjusting for periodic depreciation 
D) Keeping track of the physical location of the assets

Question 7

Payroll outsourcing has become popular and prevalent) become is offers increased convenience and confidentiality.

Accepted Answer

A) True 
 B)False

Question 8

The term "ghost employee" means that:

Accepted Answer

A) Hours worked has been exaggerated by an employee. 
B) False sales have been claimed to boost commission earned. 
C) Overtime hours have been inflated. 
D) Someone who does not work for the company receives a paycheck.
TEST BANK - CHAPTER 10 - MULTIPLE CHOICE

Question 9

The document is prepared in order to map out the jobs and reporting relationships within an organization.This may include only top branches of an organization or may include all positions within the company.

Accepted Answer

A) Employee List 
B) Organization Chart 
C) Hierarchy Tree 
D) Human Resources Listing

Question 10

Internal control activities within the payroll process, identified as adequate records and documents, would include which of the following?

Accepted Answer

A) Manager approval of payroll prior to signing checks 
B) Independent paymaster 
C) Physical controls in areas where cash and paychecks are held 
D) Paychecks are prepared on prenumbered checks

Question 11

Fixed assets are one area where earnings management may be prevalent due to the judgmental nature of the underlying data.

Accepted Answer

A) True 
 B)False

Question 12

The acquisition of fixed assets is normally initiated by a user department when they identify a need for a new asset, either to replace an existing asset or to enhance its current pool.

Accepted Answer

A) True 
 B)False

Question 13

If a new cost is incurred related to an asset that is considered to enhance that, either by extending the useful life or increasing the efficiency, the fixed asset accountant must make sure the appropriate adjustments are made to the fixed asset subsidiary ledger.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following procedures would be most useful in determining the effectiveness of a company's internal controls regarding the existence or occurrence of payroll transactions?

Accepted Answer

A) Observe the segregation of duties concerning personnel responsibilities and payroll disbursement. 
B) Inspect evidence of accounting for prenumbered payroll checks. 
C) Recompute the payroll deductions for employee fringe benefits. 
D) Verify the preparation of the monthly payroll account bank reconciliation.

Question 15

Before the paychecks are sent to management for authorization, the human resources department should compare the hours reported on the time sheets with the hours shown on the payroll register.

Accepted Answer

A) True 
 B)False

Question 16

The policies and procedures involved in purchasing property; capturing and maintaining relevant data about the assets; paying for and recording the related assets; depreciation and other expenses; and gains or losses are collectively referred to as:

Accepted Answer

A) Capital resources 
B) Fixed asset processes 
C) Property administration 
D) Capital procedures

Question 17

This document is a financial plan detailing all of the company's investments in fixed assets and other investments.

Accepted Answer

A) Investment Analysis 
B) Feasibility Study 
C) Operating Budget 
D) Capital Budget

Question 18

Assets to be included in the fixed asset pool would include all of the following, except:

Accepted Answer

A) Vehicles 
B) Furniture 
C) Office Supplies 
D) Real Estate

Question 19

For proper segregation of duties, the department that should authorize new employees for payroll would be:

Accepted Answer

A) Payroll. 
B) Human resources. 
C) Cash disbursements. 
D) General ledger.

Question 20

The human resources department should be responsible for the record keeping function related to payroll.

Accepted Answer

A) True 
 B)False

Exam 10: Expenditures Processes and Controls Payroll and Fixed Assets

Internal control problems would be likely to result if a company's payroll department supervisor was also responsible for:

Many companies use independent, internet-based service providers to handle their payroll processing.These payroll providers specialize in offering solutions and constant access to payroll information.

The internal control process of requiring physical controls in place in areas where fixed assets are held, will help to minimize the risk of:

Internal control activities within the payroll process, identified as authorization, would include which of the following?

This item would include explanations concerning the qualifications and responsibilities of each position shown on organization chart.The item is also supported by policies and procedures manuals that outline specific activities performed by each position.

Activities involved with the fixed assets continuance phase of the fixed assets processes include all of the following, except:

Payroll outsourcing has become popular and prevalent) become is offers increased convenience and confidentiality.

The term "ghost employee" means that:

The document is prepared in order to map out the jobs and reporting relationships within an organization.This may include only top branches of an organization or may include all positions within the company.

Internal control activities within the payroll process, identified as adequate records and documents, would include which of the following?

Fixed assets are one area where earnings management may be prevalent due to the judgmental nature of the underlying data.

The acquisition of fixed assets is normally initiated by a user department when they identify a need for a new asset, either to replace an existing asset or to enhance its current pool.

If a new cost is incurred related to an asset that is considered to enhance that, either by extending the useful life or increasing the efficiency, the fixed asset accountant must make sure the appropriate adjustments are made to the fixed asset subsidiary ledger.

Which of the following procedures would be most useful in determining the effectiveness of a company's internal controls regarding the existence or occurrence of payroll transactions?

Before the paychecks are sent to management for authorization, the human resources department should compare the hours reported on the time sheets with the hours shown on the payroll register.

The policies and procedures involved in purchasing property; capturing and maintaining relevant data about the assets; paying for and recording the related assets; depreciation and other expenses; and gains or losses are collectively referred to as:

This document is a financial plan detailing all of the company's investments in fixed assets and other investments.

Assets to be included in the fixed asset pool would include all of the following, except:

For proper segregation of duties, the department that should authorize new employees for payroll would be:

The human resources department should be responsible for the record keeping function related to payroll.