Question 1

One step in the payroll cycle is the preparation of paychecks.In the next step the payroll register is sent to accounts payable for review.What is the following step in the process?

Accepted Answer

After the payroll register has been reviewed by accounts payable, the next step is to prepare a disbursement voucher that authorizes the transfer of funds from the company's general account to the payroll account for the amount of the payroll. Once the disbursement voucher has been prepared and approved, funds are transferred and paychecks can be distributed to employees. The computation of payroll taxes typically occurs during the preparation of the payroll register, so it is not the next step in the process. The printing of earnings statements may occur before or after the preparation of paychecks and is not necessarily the next step in the process.

Question 2

Direct deposit of employee paychecks is one way an organization can improve efficiency and reduce payroll-processing costs.Which statement regarding direct deposit is incorrect?

Accepted Answer

The cashier must still authorize the transfer of funds from the organization's checking account to a payroll checking account, even with direct deposit.

Question 3

The key to preventing unauthorized changes to the payroll master file is

Accepted Answer

By segregating duties between the authorization of changes and the physical handling of paychecks, there is a control in place to prevent an individual from making unauthorized changes to the payroll master file and then distributing the altered paychecks. This control provides a check and balance system to prevent potential fraud or errors. While having honest people and reviewing changes are also important controls, they are not as effective as the segregation of duties in preventing unauthorized changes to the payroll master file.

Question 4

The document that lists each employee's gross pay,payroll deductions,and net pay in a multicolumn format is called

Accepted Answer

The payroll register is the document that lists each employee's gross pay, payroll deductions, and net pay in a multicolumn format. It provides a comprehensive overview of the payroll details for all employees for a specific pay period.

Question 5

What is a potential threat to the activity of payroll processing?

Accepted Answer

Unauthorized changes to the payroll master file can lead to incorrect payments, fraud, and data integrity issues, directly impacting payroll processing.

Question 6

What is the best control to reduce the risk of losing payroll data?

Accepted Answer

The answer of What is the best control to reduce...

Question 7

Theft or fraudulent distribution of payroll checks is a potential threat to the payroll processing activity.What is one control that can be implemented to help prevent paychecks being issued to a "phantom" or "ghost" employee?

Accepted Answer

Having paychecks distributed by someone who does not authorize or record payroll helps ensure that there is a separation of duties, reducing the risk of fraudulent issuance to non-existent employees.

Question 8

A "zero balance check" refers to which of the following control procedures?

Accepted Answer

A zero balance check is a control procedure used for payroll clearing accounts, which ensures that the sum of all payroll transactions equal zero after the disbursements are made. This helps to eliminate errors and potential fraud in payroll processing. Therefore, the correct choice is C - a payroll clearing account. The other options, such as batch totals, cross-footing the payroll register, and online edit control, relate to other control procedures used in payroll processing but do not specifically address the zero balance check.

Question 9

The results of an internal audit finds that there is a problem with inaccurate time data being entered into the payroll system.What is an applicable control that can help prevent this event from occurring in the future?

Accepted Answer

Automation of data collection can help prevent inaccurate time data from being entered into the payroll system by minimizing human error and ensuring accurate and timely data entry. Proper segregation of duties, sound hiring procedures and review of appropriate performance metrics may help prevent other types of errors or fraud, but may not directly address the issue of inaccurate time data entry.

Question 10

Which of the following controls is inappropriate for payroll check writing?

Accepted Answer

The use of a payroll clearing account is a control measure that helps to ensure that all payroll transactions are properly recorded and accounted for. This control is appropriate for payroll check writing. The other options listed are also appropriate controls for payroll check writing.

Question 11

Which control would be most appropriate to address the problem of inaccurate payroll processing?

Accepted Answer

Cross-footing of the payroll register involves independently verifying the totals of the payroll register to detect any inconsistencies or errors. This control can help ensure the accuracy of payroll processing. Encryption and direct deposit are not directly related to the accuracy of payroll processing, and an imprest payroll checking account deals with the safeguarding of payroll funds, not accuracy.

Question 12

What is the purpose of a general ledger payroll clearing account?

Accepted Answer

The purpose of a general ledger payroll clearing account is to check the accuracy and completeness of payroll recording and its allocation to cost centers, ensuring that the payroll expenses are properly recorded and allocated to the correct cost centers. The account serves as a temporary holding account for payroll transactions and enables the reconciliation of payroll data from the payroll system to the general ledger. This helps in identifying any errors in the payroll records and ensures that the payroll expenses are properly allocated to the respective cost centers.

Question 13

Which of the following is not a potential effect of inaccurate time data?

Accepted Answer

Inaccurate time data primarily affects labor-related expenses and employee morale, not the calculation of overhead costs, which are typically based on fixed or variable expenses unrelated to time tracking.

Question 14

Many demands are placed on the company's HRM/payroll system.For example,federal and state laws require employers to contribute a specified percentage of each employee's gross pay into certain funds.Such funds are used for

Accepted Answer

The answer of Many demands are placed on the company's...

Question 15

One threat to the HRM/payroll cycle is the potential for violation of employment laws.This threat relates directly to the process or activity of

Accepted Answer

The threat of violating employment laws is most closely related to the hiring and recruiting process, as this is the stage where laws related to discrimination, background checks, and proper documentation must be followed. However, this threat can also have implications for payroll processing if proper records are not maintained or if the organization is found to be in violation of employment laws.

Question 16

When using electronic documents,__________ increase the accuracy of data entry.

Accepted Answer

Application controls are specifically designed to ensure the accuracy, completeness, and validity of electronic data entry. They include edit checks, validation routines, and other measures that help prevent errors and discrepancies in electronic documents. Access controls, separation of duties, and general controls are important for overall security and compliance but do not directly address data entry accuracy.

Question 17

Which one of the following tasks is most important in a firm's accounting information system?

Accepted Answer

The answer of Which one of the following tasks is...

Question 18

As the payroll system processes each payroll transaction,the system should also perform which activity listed below?

Accepted Answer

It is important for the payroll system to allocate labor costs to appropriate general ledger accounts and use cumulative totals to create a summary journal entry to be posted to the general ledger in order to accurately reflect the financial impact of payroll on the organization. Therefore, both activities listed in A and B should be performed by the payroll system.

Question 19

Some organizations outsource their payroll and/or HRM functions in an effort to reduce costs.A third party that maintains the payroll master file for each of its clients and processes payroll for them is called

Accepted Answer

A payroll service bureau is a third party organization that provides payroll processing services to other companies. They maintain the payroll master file and handle all aspects of payroll processing, such as calculating taxes, producing paychecks, and distributing them to employees. Outsourcing payroll to a service bureau can reduce costs for companies that do not have the resources or expertise to manage payroll in-house. Professional employer organizations (PEOs) provide a broader range of HR functions, including benefits administration and employee relations, while value-added networks (VANs) and electronic data interfaces (EDIs) are technology solutions for exchanging information between businesses.

Question 20

The employer pays a portion of some payroll taxes and employee benefits.Both the employee and employer pay which benefit or tax listed below?

Accepted Answer

Social security taxes are split evenly between the employer and employee. The employer and employee both pay 6.2% of the employee's wages, up to a certain limit set each year by the Social Security Administration. Therefore, both the employer and employee have a responsibility to pay this tax.

Quiz 13: The Human Resources Managementpayroll Cycle