Chapter 13 Exam 2025 Questions And Answers

Production accounting generates important information for management decisions but also is a source of audit risk because ________. production accountants may not be competent production processes require a lot of allocations goods produced may not be marketable goods claimed as produced may not exist - ANS production processes require a lot of allocations Which of the following documents is NOT included in the payroll cycle? payroll cheques timekeeping records termination notices supplier invoices - ANS supplier invoices 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? Distributing paycheques. Authorizing overtime hours. Authorizing the addition or removal of employees from the payroll. Collecting and retaining unclaimed paycheques. - ANS Authorizing the addition or removal of employees from the payroll. The purpose of segregating the duties of hiring personnel and distributing payroll cheques is to separate the ________. human resources function from the controllership function administrative controls from the internal accounting controls authorization of transactions from the custody of related assets operational responsibility from the record-keeping responsibility - ANS authorization of transactions from the custody of related assets In the area of payroll, which of the following procedures represents proper control over the custody of assets? The supervisor receives a copy of the payroll register for a chance to approve the payroll after it is completed. Individual paycheques are prepared. Unclaimed payroll cheques are held in the office of the chief financial officer. Signatures from employees are obtained for calculation of deductions. - ANS Unclaimed payroll cheques are held in the office of the chief financial officer. Small Corporation uses a Wages Clearing Account for its payroll disbursements. At the end of February, a reasonably large debit balance remained in this account. What is the most likely reason? More labour cost had been assigned to the expense accounts than had been paid. Some labour cost had not been properly classified in the expense accounts. Some employees had not yet cashed their cheques. Not enough cash had been transferred to the bank account. - ANS Some labour cost had not been properly classified in the expense accounts. An auditor is most likely to assess control risk at maximum if the payroll department supervisor is responsible for ________. examining authorization forms for new employees authorizing payroll rate changes for all employees comparing payroll registers with original batch transmittal data hiring all subordinate payroll department employees - ANS authorizing payroll rate changes for all employees Which of the following is most likely to approve changes in pay rates and deductions from employee salaries? Personnel department. Treasurer. Controller. Payroll department. - ANS Personnel department. Which of the following is NOT a major risk in the payroll cycle? Paying fictitious employees. Paying employees more than a market wage. Overpayment for time or production. - ANS Paying employees more than a market wage. Selecting a sample of time clock cards and examining them for evidence of approval by a supervisor then tracing the hours recorded to the payroll registers is a procedure designed to obtain evidence about the control objective(s) of ________. validity only authorization only completeness only authorization and completeness. - ANS authorization and completeness. The sampling unit in a test of controls relating to the validity of payroll transactions is ordinarily a(n) ________. clock card or time ticket employee T-4 form employee personnel record payroll register entry - ANS payroll register entry Tracing selected items from the payroll register to approved, employee time cards provides evidence that ________. internal controls relating to payroll disbursements were operating effectively payroll cheques were signed by an appropriate officer independent of the payroll preparation process only bona fide employees worked and their pay was properly computed employees worked the number of hours for which their pay was computed - ANS employees worked the number of hours for which their pay was computed