Question

1. A CPA reviews a client’s payroll procedures. The CPA would consider internal control to be less than effective if a payroll department supervisor was assigned the responsibility for
a. Reviewing and approving time reports for subordinate employees.
b. Distributing payroll checks to employees.
c. Hiring subordinate employees.
d. Initiating requests for salary adjustments for subordinate employees.

2. Internal accounting control is strengthened when the quantity of merchandise ordered is omitted from the copy of the purchase order sent to the
a. Department that initiated the requisition.
b. Receiving department.
c. Purchasing agent.
d. Accounts payable department.

3. Which of the following controls would be most effective in ensuring that recorded purchases are free of material errors?
a. The receiving department compares the quantity ordered on purchase orders with the quantity received on receiving reports.
b. Vendors’ invoices are compared with purchase orders by an employee who is independent of the receiving department.
c. Receiving reports require the signature of the individual who authorized the purchase.
d. Purchase orders, receiving reports, and vendors’ invoices are matched independently in preparing vouchers.

4. The purpose of segregating the duties of hiring personnel and distributing payroll checks is to separate the
a. Administrative controls from the internal accounting controls.
b. HR functions from the controllership function.
c. Operational responsibility from the record- keeping responsibility.
d. Authorization of transactions from the custody of related assets.

5. When goods are received, the receiving clerk should match the goods with the
a. Purchase order and the requisition form.
b. Vendor’s invoice and the receiving report.
c. Vendor’s shipping document and the purchase order.
d. Receiving report and the vendor’s shipping document.

6. Effective internal control procedures over the payroll function may include
a. Reconciliation of totals on job- time tickets with job reports by employees responsible for those specific jobs.
b. Verification of agreement of job- time tickets with employee clock card hours by a payroll department employee.
c. Preparation of payroll transaction journal entries by an employee who reports to the supervisor of the personnel department.
d. Custody of rate authorization records by the supervisor of the payroll department.

7. For internal control purposes, which of the following individuals preferably should be responsible for the distribution of payroll checks?
a. Bookkeeper
b. Payroll clerk
c. Cashier
d. Receptionist

8. The authority to accept incoming goods in receiving should be based on a( an)
a. Vendor’s invoice.
b. Materials requisition.
c. Bill of lading.
d. Approved purchase order.

9. Which of the following procedures most likely would be considered a weakness in an entity’s internal controls over payroll?
a. A voucher for the amount of the payroll is prepared in the general accounting department based on the payroll department’s payroll summary?
b. Payroll checks are prepared by the payroll department and signed by the treasurer.
c. The employee who distributes payroll checks returns unclaimed payroll checks to the payroll department.
d. The personnel department sends employees’ termination notices to the payroll department.



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  • CreatedFebruary 26, 2015
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