ACCOUNTING 418-EXAM 2 -CHAPTERS 6-10 UPDATED
ACTUAL QUESTIONS AND CORRECT ANSWERS
Question:
1. A _______________ is an individual on the payroll who does not
actually work for the organization.
Falsified employee
Phantom employee
Ghost employee
Shell employee
Answer:
Ghost Employee
Question:
2. Which of the following is not a type of payroll scheme?
Ghost employee scheme
False deduction scheme
Falsified hours and salary scheme
Commission scheme
Answer:
False deduction scheme
Question:
3. Marsha Wood added her one-year-old niece, Jackie, to
the payroll at JNC Company and began issuing
paychecks in Jackie's name, even though Jackie did not
work for the organization. Marsha's niece is not
considered a ghost employee because she is a real
individual rather than a fictitious person.
True
False
Answer:
False
,Question:
4. Which of the following is not necessary for a ghost
employee scheme to succeed?
Timekeeping and wage rate information must be
collected.
The ghost must be added to the payroll.
The perpetrator must have access to a bank account in
the ghost employee's name.
A paycheck must be issued to the ghost.
Answer:
The perpetrator must have access to a bank account in the ghost employee's
name
Question:
5. To safeguard against ghost employee schemes, the
person in charge of entering new employees in the
payroll system should also distribute the paychecks so
that he or she can look for payments to unauthorized
employees.
True
False
Answer:
False
Question:
6. If a fraudster fails to remove a terminated employee from
the payroll and collects the former employee's fraudulent
paychecks, he or she is committing a:
Payroll larceny scheme
Falsified hours and salary scheme
Forged endorsement scheme
Ghost employee scheme
Answer:
Ghost employee scheme
Question:
7. Salaried ghost employees are generally easier to create
and more difficult to conceal than hourly ghost
employees
True
False
Answer:
True
,Question:
8. Which of the following analyses can be used to identify
ghost employee schemes?
Identifying employees who have no withholding taxes
taken out
Comparing actual payroll expenses to budgeted
expenses
Comparing employees who have the same Social
Security number, bank account, or physical address
All of the above
Answer:
All of the above
Question:
9. Which of the following procedures will not help prevent
ghost employee schemes?
The personnel records are maintained separately from
the payroll and timekeeping functions.
The personnel department conducts background and
reference checks on all prospective employees before
hiring them.
The person responsible for hiring new employees also
supervises the payroll function.
The personnel department verifies all changes to the
payroll.
Answer:
The person responsible for hiring new employees also supervises the payroll
function
Question:
10. The most common method of misappropriating funds
from the payroll is:
Overpayment of wages
Using a ghost employee
Overstating commissions
Theft of payroll deductions
Answer:
Overpayment of wages
, Question:
11. Which of the following is not a method typically used by
an employee to fraudulently inflate his or her hours in a
manual timekeeping system?
Collusion
"Lazy manager" method
Forging the supervisor's signature
Manipulating the pay grade
Answer:
Manipulating the pay grade
Question:
12. If an employee generates a much higher percentage of
uncollected sales than his coworkers, what type of
scheme might he be committing?
Sales skimming
Commission scheme
Multiple reimbursement scheme
Shell company scheme
Answer:
Commission scheme
Question:
13. Which of the following controls will help prevent and
detect falsified hours and salary schemes?
The duties of payroll preparation, authorization, and
distribution are segregated.
Sick leave and vacation time are monitored for excesses
by the payroll department.
Supervisors return authorized timecards to the
employees for review before they are sent to the payroll
department.
All of the above
Answer:
The duties of payroll preparation, authorization, and distribution are segregated.
ACTUAL QUESTIONS AND CORRECT ANSWERS
Question:
1. A _______________ is an individual on the payroll who does not
actually work for the organization.
Falsified employee
Phantom employee
Ghost employee
Shell employee
Answer:
Ghost Employee
Question:
2. Which of the following is not a type of payroll scheme?
Ghost employee scheme
False deduction scheme
Falsified hours and salary scheme
Commission scheme
Answer:
False deduction scheme
Question:
3. Marsha Wood added her one-year-old niece, Jackie, to
the payroll at JNC Company and began issuing
paychecks in Jackie's name, even though Jackie did not
work for the organization. Marsha's niece is not
considered a ghost employee because she is a real
individual rather than a fictitious person.
True
False
Answer:
False
,Question:
4. Which of the following is not necessary for a ghost
employee scheme to succeed?
Timekeeping and wage rate information must be
collected.
The ghost must be added to the payroll.
The perpetrator must have access to a bank account in
the ghost employee's name.
A paycheck must be issued to the ghost.
Answer:
The perpetrator must have access to a bank account in the ghost employee's
name
Question:
5. To safeguard against ghost employee schemes, the
person in charge of entering new employees in the
payroll system should also distribute the paychecks so
that he or she can look for payments to unauthorized
employees.
True
False
Answer:
False
Question:
6. If a fraudster fails to remove a terminated employee from
the payroll and collects the former employee's fraudulent
paychecks, he or she is committing a:
Payroll larceny scheme
Falsified hours and salary scheme
Forged endorsement scheme
Ghost employee scheme
Answer:
Ghost employee scheme
Question:
7. Salaried ghost employees are generally easier to create
and more difficult to conceal than hourly ghost
employees
True
False
Answer:
True
,Question:
8. Which of the following analyses can be used to identify
ghost employee schemes?
Identifying employees who have no withholding taxes
taken out
Comparing actual payroll expenses to budgeted
expenses
Comparing employees who have the same Social
Security number, bank account, or physical address
All of the above
Answer:
All of the above
Question:
9. Which of the following procedures will not help prevent
ghost employee schemes?
The personnel records are maintained separately from
the payroll and timekeeping functions.
The personnel department conducts background and
reference checks on all prospective employees before
hiring them.
The person responsible for hiring new employees also
supervises the payroll function.
The personnel department verifies all changes to the
payroll.
Answer:
The person responsible for hiring new employees also supervises the payroll
function
Question:
10. The most common method of misappropriating funds
from the payroll is:
Overpayment of wages
Using a ghost employee
Overstating commissions
Theft of payroll deductions
Answer:
Overpayment of wages
, Question:
11. Which of the following is not a method typically used by
an employee to fraudulently inflate his or her hours in a
manual timekeeping system?
Collusion
"Lazy manager" method
Forging the supervisor's signature
Manipulating the pay grade
Answer:
Manipulating the pay grade
Question:
12. If an employee generates a much higher percentage of
uncollected sales than his coworkers, what type of
scheme might he be committing?
Sales skimming
Commission scheme
Multiple reimbursement scheme
Shell company scheme
Answer:
Commission scheme
Question:
13. Which of the following controls will help prevent and
detect falsified hours and salary schemes?
The duties of payroll preparation, authorization, and
distribution are segregated.
Sick leave and vacation time are monitored for excesses
by the payroll department.
Supervisors return authorized timecards to the
employees for review before they are sent to the payroll
department.
All of the above
Answer:
The duties of payroll preparation, authorization, and distribution are segregated.
