Select the best answer and explain why
Question 1 (8 points) Question 1. (8 Marks). (1 Mark each) Select the best answer from the choices provided in each question. List your answers in the space provided. 1. In the area of payroll, which of the following procedures represents proper control over the custody of assets? A) The supervisor receives a copy of the payroll register for a chance to approve the payroll after it is completed. B) Individual paycheques are prepared. C) Unclaimed payroll cheques are held in the office of the chief financial officer. D) Signatures from employees are obtained for calculation of deductions. 2. Which of the following would raise a red flag in the audit of payroll? A) One person in the company is authorized to sign all payroll cheques. 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. P3about the control objective(s) of A) Validity only. B) Authorization only. C) Completeness only. D) Authorization and completeness. 5. The sampling unit in a test of controls relating to the validity of payroll transactions is ordinarily a (an) A) Clock card or time ticket. B) Employee T-4 Form. C) Employee personnel record. D) Payroll register (journal) entry. 6. Tracing selected items from the payroll register to approved, employee time cards provides evidence that A) Internal controls relating to payroll disbursements were operating effectively. B) Payroll cheques were signed by an appropriate officer independent of the NS WE OC) Only bona fide employees worked and their pay was properly computed. D) Employees worked the number of hours for which their pay was computed. 7. Which of the following procedures carried out by the personnel department best department? reduces the risk of payroll fraud and represents an appropriate responsibility for the A) Distributing paycheques. B) Authorizing overtime hours. C) Authorizing the addition or removal of employees from the payroll. D) Collecting and retaining unclaimed paycheques. 8. An auditor is verifying that a company owns the equipment shown in its financial statements. What is the best evidence of ownership? A) A canceled cheque written to acquire the equipment. The current year's amortization expense journal entry. B) An interview with the equipment custodian verifying company ownership. D) The inclusion of the equipment on the company's balance sheet.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 initialed the time card of an employee. 3. Which of the following is not a major risk in the payroll cycle? 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. 4. 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
