Question 1

Describe the major risk areas associated with the payroll cycle.

Accepted Answer

a.Paying fictitious employees (invalid t

Question 2

Federal Form T4 Summary is the employer's annual federal employee remittance return.

Accepted Answer

A) True 
 B)False

Question 3

Overall production authorization starts with production planning, which usually is based on a sales forecast.

Accepted Answer

A) True 
 B)False

Question 4

Reconciling the open production cost reports to the work-in-process inventory control account is a procedure designed to test the control objective of

Accepted Answer

A) Environment. 
B) Validity. 
C) Completeness. 
D) Authorization. 
A) Environment. 
B) Validity. 
C) Completeness. 
D) Authorization.

Question 5

One procedure in an audit program for tests of controls reads: "Select a sample of employees from the payroll register and vouch identification numbers, pay rates, and authorized deductions to the personnel files." This procedure is designed to test the validity of payroll information for employees.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not a major risk in the payroll cycle?

Accepted Answer

A) Paying fictitious employees. 
B) Paying employees more than a market wage. 
C) Overpayment for time or production. 
D) Incorrect accounting for costs and expenses. 
A) Paying fictitious employees. 
B) Paying employees more than a market wage. 
C) Overpayment for time or production. 
D) Incorrect accounting for costs and expenses.

Question 7

The following account is not considered in the production cycle.

Accepted Answer

A) Inventory 
B) Cost of goods sold 
C) Amortization expense 
D) Sales 
A) Inventory 
B) Cost of goods sold 
C) Amortization expense 
D) Sales

Question 8

Which of the following would raise a red flag in the audit of payroll?

Accepted Answer

A) One person in the company is authorized to sign all payroll cheques. 
B) The endorsement on a cancelled payroll cheque included the words "for deposit only" above the payee's signature. 
C) The endorsement on a cancelled payroll cheque included the signature of a supervisor below the signature of the payee. 
D) A supervisor initialled the time card of an employee. 
A) One person in the company is authorized to sign all payroll cheques. 
B) The endorsement on a cancelled payroll cheque included the words "for deposit only" above the payee's signature. 
C) The endorsement on a cancelled payroll cheque included the signature of a supervisor below the signature of the payee. 
D) A supervisor initialled the time card of an employee.

Question 9

What is a clearing account? What are the risks associated with this type of account?

Accepted Answer

A clearing account is a temporary storag

Question 10

An auditor is most likely to assess control risk at maximum if the payroll department supervisor is responsible for

Accepted Answer

A) Examining authorization forms for new employees. 
B) Authorizing payroll rate changes for all employees. 
C) Comparing payroll registers with original batch transmittal data. 
D) Hiring all subordinate payroll department employees. 
A) Examining authorization forms for new employees. 
B) Authorizing payroll rate changes for all employees. 
C) Comparing payroll registers with original batch transmittal data. 
D) Hiring all subordinate payroll department employees.

Question 11

Cost accounting can be performed by those who also:

Accepted Answer

A) Authorize production. 
B) Allocate overhead charges. 
C) Have custody of assets. 
D) Reconcile labour reports. 
A) Authorize production. 
B) Allocate overhead charges. 
C) Have custody of assets. 
D) Reconcile labour reports.

Question 12

A test of the completeness objective is selecting a sample of payroll register entries and vouching them to employee data in the personnel files such as employee identification, rate of pay, and authorized deductions.

Accepted Answer

A) True 
 B)False

Question 13

The accounting department at Blue Manufacturing Limited receives production information at the end of each week.The production floor supervisor reports time and production data and the payroll department reports labour cost data.How will the accounting department use this information? Why?

Accepted Answer

The accounting department is receiving d

Question 14

A materials requisition is the document that authorizes the inventory custodian to release raw materials and supplies to production personnel.

Accepted Answer

A) True 
 B)False

Question 15

Selecting a sample of payroll summaries and vouching the details to time records is a procedure designed to test the control objective of

Accepted Answer

A) Environment. 
B) Validity. 
C) Completeness. 
D) Classification. 
A) Environment. 
B) Validity. 
C) Completeness. 
D) Classification.

Question 16

The payroll register is the primary original record for payroll accounting.

Accepted Answer

A) True 
 B)False

Question 17

The payroll cycle starts with keeping track of attendance and ends with payment to the employee.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following procedures carried out by the personnel department best reduces the risk of payroll fraud and represents an appropriate responsibility for the department?

Accepted Answer

A) Distributing paycheques. 
B) Authorizing overtime hours. 
C) Authorizing the addition or removal of employees from the payroll. 
D) Collecting and retaining unclaimed paycheques. 
A) Distributing paycheques. 
B) Authorizing overtime hours. 
C) Authorizing the addition or removal of employees from the payroll. 
D) Collecting and retaining unclaimed paycheques.

Question 19

The five functional responsibilities for the payroll cycle are (1) Personnel and Labour Relations, (2) Supervision, (3) Timekeeping and Cost Accounting, (4) Payroll Accounting, and (5) Payroll Distribution.For each responsibility, identify the type of duty or duties (authorization, custody, record keeping, periodic reconciliation) associated with the function and briefly describe the activity involved.

Accepted Answer

a.Personnel and Labour Relations: Author

Question 20

Finished goods inventory is low in inherent risk since production is so well understood.

Accepted Answer

A) True 
 B)False

Describe the major risk areas associated with the payroll cycle.

Federal Form T4 Summary is the employer's annual federal employee remittance return.

Overall production authorization starts with production planning, which usually is based on a sales forecast.

Reconciling the open production cost reports to the work-in-process inventory control account is a procedure designed to test the control objective of

One procedure in an audit program for tests of controls reads: "Select a sample of employees from the payroll register and vouch identification numbers, pay rates, and authorized deductions to the personnel files." This procedure is designed to test the validity of payroll information for employees.

Which of the following is not a major risk in the payroll cycle?

The following account is not considered in the production cycle.

Which of the following would raise a red flag in the audit of payroll?

What is a clearing account? What are the risks associated with this type of account?

An auditor is most likely to assess control risk at maximum if the payroll department supervisor is responsible for

Cost accounting can be performed by those who also:

A test of the completeness objective is selecting a sample of payroll register entries and vouching them to employee data in the personnel files such as employee identification, rate of pay, and authorized deductions.

The accounting department at Blue Manufacturing Limited receives production information at the end of each week.The production floor supervisor reports time and production data and the payroll department reports labour cost data.How will the accounting department use this information? Why?

A materials requisition is the document that authorizes the inventory custodian to release raw materials and supplies to production personnel.

Selecting a sample of payroll summaries and vouching the details to time records is a procedure designed to test the control objective of

The payroll register is the primary original record for payroll accounting.

The payroll cycle starts with keeping track of attendance and ends with payment to the employee.

Which of the following procedures carried out by the personnel department best reduces the risk of payroll fraud and represents an appropriate responsibility for the department?

Finished goods inventory is low in inherent risk since production is so well understood.

Introduction to Auditing

Audit, Assurance, and Quality Control Standards

Reports on Audited Financial Statements and Audited Internal Controlt

Professional Ethics and Auditor Responsibilities

Legal Liability

Preliminary Audit Planning: Understanding the Auditee

Assessing Risks and Internal Control

Audit Evidence and Assurance

Control Assessment and Testing

Audit Sampling

Revenues, Receivables, and Receipts Process

Purchases, Payables, and Payments Processtrue

Finance and Investment Process

Completing the Audit

Other Public Accounting Services and Reports

Fraud Awareness Auditing

Filters

Exam 13: Production and Payroll Process

Describe the major risk areas associated with the payroll cycle.

Federal Form T4 Summary is the employer's annual federal employee remittance return.

Overall production authorization starts with production planning, which usually is based on a sales forecast.

Reconciling the open production cost reports to the work-in-process inventory control account is a procedure designed to test the control objective of

Which of the following is not a major risk in the payroll cycle?

The following account is not considered in the production cycle.

Which of the following would raise a red flag in the audit of payroll?

What is a clearing account? What are the risks associated with this type of account?

An auditor is most likely to assess control risk at maximum if the payroll department supervisor is responsible for

Cost accounting can be performed by those who also:

A test of the completeness objective is selecting a sample of payroll register entries and vouching them to employee data in the personnel files such as employee identification, rate of pay, and authorized deductions.

The accounting department at Blue Manufacturing Limited receives production information at the end of each week.The production floor supervisor reports time and production data and the payroll department reports labour cost data.How will the accounting department use this information? Why?

A materials requisition is the document that authorizes the inventory custodian to release raw materials and supplies to production personnel.

Selecting a sample of payroll summaries and vouching the details to time records is a procedure designed to test the control objective of

The payroll register is the primary original record for payroll accounting.

The payroll cycle starts with keeping track of attendance and ends with payment to the employee.

Which of the following procedures carried out by the personnel department best reduces the risk of payroll fraud and represents an appropriate responsibility for the department?

Finished goods inventory is low in inherent risk since production is so well understood.

Introduction to Auditing

Audit, Assurance, and Quality Control Standards

Reports on Audited Financial Statements and Audited Internal Controlt

Professional Ethics and Auditor Responsibilities

Legal Liability

Preliminary Audit Planning: Understanding the Auditee

Assessing Risks and Internal Control

Audit Evidence and Assurance

Control Assessment and Testing

Audit Sampling

Revenues, Receivables, and Receipts Process

Purchases, Payables, and Payments Processtrue

Finance and Investment Process

Completing the Audit

Other Public Accounting Services and Reports

Fraud Awareness Auditing

Filters