Chapter18 - final

Auditing and Assurance Services (12th Edition)

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CHAPTER 18 Multiple-Choice Questions 1. The payroll cycle consists of how many classes of transactions? easy a. One a b. Two c. Three d. It differs across entities. 2. Payroll policies should require a competent, independent person to: easy a. recalculate actual hours worked. d b. review for the proper approval of all overtime. c. examine time cards for erasures and alterations. d. do all of the above. 3. Which of the following statements is false ? easy a. The payroll cycle consists of one class of transactions. b b. Balance sheet accounts related to payroll are generally more significant than related transactions. c. Internal controls over payroll are effective for most companies. d. Small companies usually have effective controls over payroll. 4. Which of the following is not an important control consideration in the processing of payroll? easy b a. The person authorized to sign paychecks should not be otherwise involved in the preparation of the payroll. b. A check-signing machine should not be used to replace a manual signature. c. Distribution of pay checks should be performed by someone who is not involved in the other payroll functions. d. Unclaimed paychecks should be immediately returned for redeposit. 5. Which of the following statements about the payroll and personnel cycle is correct? easy c a. There are three classes of transactions within the payroll cycle – salaried employees, hourly employees, and commissioned employees. b. Transactions are less significant than related balance sheet accounts. c. Internal controls over payroll are effective for almost all companies, even small ones. d. All of the above are correct. 6. easy Which of the following types of audit procedures is ordinarily emphasized the least when auditing payroll? d a. Tests of controls b. Tests of transactions c. Analytical procedures d. Tests of details of balances 7. easy A form issued for each employee summarizing the earnings and income tax deductions for the calendar year is the: d a. rate authorization form. b. summary payroll report. c. payroll master file. d. W-2 form. 8. The payroll and personnel cycle begins with which of the following events? easy a. Interviewing job candidates. b b. Hiring a new employee. 18-1
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c. Existing employees submitting requests for payment for work performed. d. Issuance of paychecks. 9. Most systems of internal control for payroll are: easy a. loosely structured but well controlled. c b. loosely structured and loosely controlled. c. highly structured and well controlled. d. highly structured but loosely controlled. 10. The payroll and personnel cycle ends with which of the following events? easy a. Interviewing job candidates. d b. Hiring a new employee. c.
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Chapter18 - final - CHAPTER 18 Multiple-Choice Questions 1....

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