Question 1

In most accounting systems, accruals for salaries and wages are recorded by adjusting entries at the end of the period for any earned-but-unpaid labor related costs.

Accepted Answer

Accruals for salaries and wages are generally recorded through adjusting entries at the end of the accounting period in order to reflect any unpaid labor-related costs that have been earned during that period. This is a common practice in many accounting systems.

Question 2

Which of the following departments is most likely responsible for pay rate changes and changes in deductible amounts for employees?
A) general accounting department
B) human resources department
C) treasurer
D) controller

Accepted Answer

The human resources department is typically responsible for managing employee compensation and benefits, including pay rate changes and deductible amount changes. The general accounting department may handle payroll processing, but would not have authority to make changes to compensation policies. The treasurer and controller departments are more focused on financial management and reporting, and would not typically be involved in day-to-day employee compensation decisions.

Question 3

An imprest payroll account that has a significant balance may indicate the presence of
A) employees not cashing their payroll checks.
B) fraudulent transfer of funds by the company.
C) lack of controls over payroll distribution.
D) the company overpaying its employees.

Accepted Answer

An imprest payroll account is a type of account for payroll funds that is replenished with a fixed amount at regular intervals. If the account has a significant balance, it may indicate that some employees have not cashed their payroll checks. This could be due to various reasons such as the employee being on vacation or sick leave, or the employee being no longer in the company's employment. However, if the balance is significant and there is no valid reason for employees not cashing their checks, it could indicate a lack of proper controls over payroll distribution.

Question 4

In most accounting systems, the accrued wages and salaries account is used only at the beginning of an accounting period.

Accepted Answer

The accrued wages and salaries account is used throughout the accounting period to record the company's obligation to pay its employees for work performed but not yet paid for. This account is adjusted at the end of the accounting period to reflect the amount of wages and salaries that have been earned but not yet paid out.

Question 5

In most accounting systems, payroll expenses are charged when the employees are actually paid rather than when the labor costs are actually incurred.

Accepted Answer

Payroll expenses are usually recorded and charged to the accounting period in which the employees are actually paid. This is in line with the accrual basis of accounting, which matches expenses with the revenues they help generate. Even though the labor costs may have been incurred in one month, the payroll expenses are recognized when the employees receive their paychecks.

Question 6

While most cycles include at least two classes of transactions, the payroll and personnel cycle includes only one class of transactions.

Accepted Answer

The payroll and personnel cycle typically focuses solely on transactions related to employee compensation and related personnel services, making it unique in having a single class of transactions.

Question 7

Hiring personnel initiates the payroll and personnel cycle.

Accepted Answer

Hiring personnel is the first step in the payroll and personnel cycle. Once personnel are hired, their information is used to set up payroll and other personnel-related processes.

Question 8

Auditors typically test details of account balances in the audit of payroll.

Accepted Answer

Auditors usually perform tests of controls and substantive analytical procedures rather than testing details of account balances when auditing payroll, as payroll transactions are often routine and predictable.

Question 9

The total of the individual employee earnings in the payroll master file 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 week's payroll.

Accepted Answer

The total of individual employee earnings in the payroll master file should match the balance of gross payroll in the general ledger accounts to ensure accuracy and consistency in financial records. This helps in maintaining the integrity of financial reporting.

Question 10

Most companies, with the exception of small ones, have effective controls over the payroll cycle.

Accepted Answer

Many companies, regardless of size, can struggle with effective controls over the payroll cycle due to complexities in regulations, human error, and potential for fraud.

Question 11

Which of the following includes all payroll transactions processed by the accounting system for a given period of time?
A) payroll journal
B) payroll transaction file
C) time report
D) payroll summary

Accepted Answer

A payroll transaction file typically includes all payroll transactions processed, including employee wages, taxes, and deductions for a given period, such as a week or a month. A payroll journal records the individual transactions, but does not necessarily include all transactions processed in the accounting system. A time report shows hours worked but does not provide information on taxes or deductions. A payroll summary provides an overview of total payroll expenses for a period, but does not include details on individual transactions.

Question 12

Which of the following statements about the payroll and personnel cycle is correct?
A) 
B) 
C) 
D)

Accepted Answer

The answer of Which of the following statements about the...

Question 13

The payroll and personnel cycle ends with which of the following events?
A) interviewing job candidates
B) hiring a new employee
C) existing employees submitting requests for payment for work performed
D) issuance of paychecks

Accepted Answer

The issuance of paychecks marks the end of the payroll and personnel cycle, as it is the final step of paying employees for their work performed during the specific pay period. A and B are part of the hiring process and occur before the payroll and personnel cycle begins, while C is a step within the cycle but not the final event.

Question 14

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.

Accepted Answer

These records are commonly known as human resource records as they contain information related to an organization's workforce, such as employment history, performance metrics, and compensation details.

Question 15

Discuss three important differences between the payroll and personnel cycle and other cycles in a typical audit.

Accepted Answer

The answer of Discuss three important differences between the payroll...

Question 16

Which department should be authorized to add and delete employees from the payroll or change pay rates and deductions?
A) the supervising department
B) the accounting department
C) the human resources department
D) the treasurer's department

Accepted Answer

The human resources department is typically responsible for managing employee records, including payroll information. They are the ones who should have the authority to add and delete employees from the payroll, change pay rates, and manage deductions.

Question 17

Firing personnel terminates the payroll and personnel cycle.

Accepted Answer

Firing personnel does not terminate the payroll and personnel cycle; it only ends the employment of the specific individuals being fired. The cycle continues for remaining and future employees.

Question 18

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 account reconciliation.
D) payroll tax returns.

Accepted Answer

The payroll master file is used to record payroll transactions for each employee and maintain total wages paid for the year to date. The payroll transaction file typically includes individual payroll records for each pay period, while the payroll master file includes cumulative information for each employee over the course of the year. The other options listed (payroll bank account reconciliation and payroll tax returns) are related to payroll, but do not specifically refer to the file used for recording payroll transactions.

Question 19

The overall audit objective in the audit of the payroll and the personnel cycle is to evaluate whether the account balances affected by the cycle are fairly stated according to the applicable accounting standards.

Accepted Answer

The statement accurately describes the overall audit objective in the audit of the payroll and the personnel cycle.

Question 20

Which of the following is not one of the business functions for the payroll and personnel cycle?
A) payment of payroll
B) timekeeping and payroll preparation
C) reconciliation of payroll account
D) human resources and employment

Accepted Answer

Reconciliation of payroll account is not a business function for the payroll and personnel cycle; it is more related to the accounting and finance functions, focusing on ensuring the accuracy and integrity of payroll transactions in the financial records.

Quiz 20: Audit of the Payroll and Personnel Cycle

In most accounting systems, accruals for salaries and wages are recorded by adjusting entries at the end of the period for any earned-but-unpaid labor related costs.

Which of the following departments is most likely responsible for pay rate changes and changes in deductible amounts for employees?

An imprest payroll account that has a significant balance may indicate the presence of

In most accounting systems, the accrued wages and salaries account is used only at the beginning of an accounting period.

In most accounting systems, payroll expenses are charged when the employees are actually paid rather than when the labor costs are actually incurred.

While most cycles include at least two classes of transactions, the payroll and personnel cycle includes only one class of transactions.

Hiring personnel initiates the payroll and personnel cycle.

Auditors typically test details of account balances in the audit of payroll.

The total of the individual employee earnings in the payroll master file should equal the total

Most companies, with the exception of small ones, have effective controls over the payroll cycle.

Which of the following includes all payroll transactions processed by the accounting system for a given period of time?

Which of the following statements about the payroll and personnel cycle is correct?

The payroll and personnel cycle ends with which of the following events?

Records that include data about employees such as employment date, performance ratings and pay rates are the

Discuss three important differences between the payroll and personnel cycle and other cycles in a typical audit.

Which department should be authorized to add and delete employees from the payroll or change pay rates and deductions?

Firing personnel terminates the payroll and personnel cycle.

The computer file used for recording payroll transactions for each employee and maintaining total wages paid for the year to date is the

The overall audit objective in the audit of the payroll and the personnel cycle is to evaluate whether the account balances affected by the cycle are fairly stated according to the applicable accounting standards.

Which of the following is not one of the business functions for the payroll and personnel cycle?