chapter 21GE.docx

1、chapter 21GEAuditing and Assurance Services, 14e, Global Edition (Arens)Chapter 21 Audit of the Payroll and Personnel CycleLearning Objective 21-11) Which of the following statements about the payroll and personnel cycle is correct?A) There are three classes of transactions within the payroll cycle

2、salaried employees, hourly employees, and commissioned employees.Transactions are more significant than related balance sheet accounts.Internal controls over payroll are effective for almost all companies, even small ones.NoNoYesB) There are three classes of transactions within the payroll cycle sal

3、aried employees, hourly employees, and commissioned employees.Transactions are more significant than related balance sheet accounts.Internal controls over payroll are effective for almost all companies, even small ones.YesNoYesC) There are three classes of transactions within the payroll cycle salar

4、ied employees, hourly employees, and commissioned employees.Transactions are more significant than related balance sheet accounts.Internal controls over payroll are effective for almost all companies, even small ones.NoYesYesD) There are three classes of transactions within the payroll cycle salarie

5、d employees, hourly employees, and commissioned employees.Transactions are more significant than related balance sheet accounts.Internal controls over payroll are effective for almost all companies, even small ones.NoYesNoAnswer: CTerms: Payroll and personnel cycleDiff: EasyObjective: LO 21-1AACSB:

6、Reflective thinking skills2) Discuss three important differences between the payroll and personnel cycle and other cycles in a typical audit.Answer: Three important differences between the payroll and personnel cycle and other cycles in a typical audit are: There is only one class of transactions fo

7、r payroll, whereas most cycles include at least two classes of transactions. In the payroll cycle, transactions are far more significant than related balance sheet accounts. Internal controls over payroll are effective for almost all companies, even small ones. This is primarily due to severe federa

8、l and state penalties for errors in withholding and paying payroll taxes and employee morale problems if employees are not paid or are underpaid.Terms: Important differences between payroll and personnel cycle and other cycles in auditDiff: ModerateObjective: LO 21-1AACSB: Reflective thinking skills

9、3) Most companies, with the exception of small ones, have effective controls over the payroll cycle.A) TrueB) FalseAnswer: BTerms: Effective controls over payroll cycleDiff: EasyObjective: LO 21-1AACSB: Reflective thinking skills4) While most cycles include at least two classes of transactions, the

10、payroll and personnel cycle includes only one class of transactions.A) TrueB) FalseAnswer: ATerms: Payroll and personnel cycle includes one class of transactionsDiff: EasyObjective: LO 21-1AACSB: Reflective thinking skills5) Because of the cycles pervasive nature, audit tests of the payroll cycle ar

11、e usually extensive.A) TrueB) FalseAnswer: BTerms: Audit tests of payroll cycleDiff: ModerateObjective: LO 21-1AACSB: Reflective thinking skillsLearning Objective 21-21) Which of the following departments is most likely responsible for pay rate changes and changes in deductible amounts for employees

12、?A) General AccountingB) Human ResourcesC) TreasuryD) ControllerAnswer: BTerms: Department responsible for pay rate changedDiff: EasyObjective: LO 21-2AACSB: Reflective thinking skills2) The payroll and personnel cycle ends with which of the following events?A) interviewing job candidatesB) hiring a

13、 new employeeC) existing employees submitting requests for payment for work performedD) issuance of paychecksAnswer: DTerms: Payroll and personnel cycleDiff: EasyObjective: LO 21-2AACSB: Reflective thinking skills3) Which of the following includes all payroll transactions processed by the accounting

14、 system for a given period of time?A) payroll journalB) payroll transaction fileC) time reportD) payroll summaryAnswer: BTerms: Includes all payroll transactions processed by the accounting systemDiff: EasyObjective: LO 21-2AACSB: Reflective thinking skills4) An imprest payroll account that has a si

15、gnificant balance may indicate the presence of:A) employees have not yet deposited or cashed payroll checks.B) fraudulent transfer of funds by the company.C) lack of controls over payroll distribution.D) the company is overpaying its employees.Answer: ATerms: Imprest payroll account has significant

16、balanceDiff: EasyObjective: LO 21-2AACSB: Analytic skills5) Records that include data about employees such as employment date, performance ratings and pay rates are the: A) human resource records.B) employee screening forms.C) summary payroll reports.D) employee folders.Answer: ATerms: Records that

17、include data about employeesDiff: EasyObjective: LO 21-2AACSB: Reflective thinking skills6) The computer file used for recording payroll transactions for each employee and maintaining total wages paid for the year to date is the:A) payroll transaction file.B) payroll master file.C) payroll bank acco

18、unt reconciliation.D) payroll tax returns.Answer: BTerms: Computer file used for recording payroll transactionsDiff: ModerateObjective: LO 21-2AACSB: Reflective thinking skills7) The file for recording each payroll transaction for each employee and maintaining total employee wages paid for the year

19、to date is the:A) payroll master file.B) summary payroll report.C) payroll journal.D) job time ticket.Answer: ATerms: File for recording each payroll transactionDiff: ModerateObjective: LO 21-2AACSB: Reflective thinking skills8) The total of the individual employee earnings in the payroll master fil

20、e should equal the total:A) balance of gross payroll in general ledger accounts.B) of the checks drawn to employees for payroll.C) gross payroll plus the total contributed by the employer for payroll taxes.D) gross pay for the current weeks payroll.Answer: ATerms: Total of individual employee earnin

21、gs in payroll master file equalsDiff: ModerateObjective: LO 21-2AACSB: Reflective thinking skills9) Which department should be authorized to add and delete employees from the payroll or change pay rates and deductions?A) the supervising departmentB) the accounting departmentC) the human resources de

22、partmentD) the treasurers departmentAnswer: CTerms: Department authorized to add and delete employees from payrollDiff: ModerateObjective: LO 21-2AACSB: Reflective thinking skills10) The auditor, in auditing payroll, wants to determine that the individuals included in her sample were employees of th

23、e company for the period under review. What is the auditors best source of evidence?A) Examination of Human Resource RecordsB) Examination of the Payroll Master FileC) Examination of the Payroll Transaction FileD) Examination of the Payroll Tax RecordsAnswer: ATerms: Auditor source of evidence to te

24、st individuals are employees of companyDiff: ModerateObjective: LO 21-2AACSB: Reflective thinking skills11) What events initiate and terminate the payroll and personnel cycle?Answer: The hiring of an employee initiates the cycle and the payments to employees, governments, and other organizations ter

25、minate the cycle.Terms: Events that initiate and terminate the payroll and personnel cycleDiff: EasyObjective: LO 21-2AACSB: Reflective thinking skills12) Discuss each of the following primary documents and records used in the personnel and employment function in the payroll and personnel cycle: per

26、sonnel records, deduction authorization form, and the rate authorization form.Answer: Human resource records. These records include employees date of employment, personnel investigations, rates of pay, authorized deductions, performance evaluations, and termination of employment. Deduction authoriza

27、tion form. This form authorizes payroll deductions, including the number of exemptions for withholding of income taxes, U.S. savings bonds, and union dues. Rate authorization form. This form authorizes employees rate of pay.Terms: Primary documents and records used in personnel and employment functi

28、on in payroll and personnel cycleDiff: ModerateObjective: LO 21-2AACSB: Reflective thinking skills13) Discuss each of the following documents and records used in the timekeeping and payroll preparation function in the payroll and personnel cycle: time card, job time ticket, summary payroll report, p

29、ayroll journal and payroll master file.Answer: The primary documents and records used in the timekeeping and payroll preparation function are: Time card. The time card is used to indicate the time the employee started and stopped working each day and the number of hours the employee worked. Job time

30、 ticket. This document indicates jobs on which a factory employee worked during a given time period. This form is used only when an employee works on different jobs or in different departments. Summary payroll report. This report summarizes payroll for a period. Payroll journal. This journal is used

31、 to record payroll checks. Payroll master file. This file contains each payroll transaction for each employee, along with total employee wages paid for the year to date.Terms: Primary documents and records used in timekeeping and payroll preparation function in payroll and personnel cycleDiff: ModerateObjective: LO 21-2AACSB: Reflective thinking skills14) Discuss each of the following primary documents and records used in the (1) payment of payroll fun