Chapter 15 – ‘The Human Resource Management and Payroll Cycle’

Question 1

1. Traditionally, accountants have been most involved with which portion
of the HRM/pay- roll cycle?
a. hiring 
b. payroll 
c. training 
d. performance evaluation

Answer 1

b.
payroll (Correct. The payroll system has traditionally been the part of the
HRM/ payroll system used by accountants.) 

Question 2

2. Which of the following statements is true?  
   a. Financial statements report the value of employee knowledge and skills.
   b. Turnover and absenteeism are costly.
   c. All employees must fill out time cards.
   d. Default configurations of ERP packages typically provide good segregation
   of duties

Answer 2

b. Turnover and absenteeism are costly. (Correct. Turnover costs1.5times the
departing employee’s salary, and absenteeism increases overtime and shortterm
hiring costs.)

Question 3

3. Which document lists the current amount and year-to-date totals of
   gross pay, deductions, and net pay for one employee?
   a. payroll register
   b. time card 
   c. paycheck
   d. earnings statement

Answer 3

d. earnings statement (Correct. The earnings statement attached to each
paycheck pro- vides the information listed.

Question 4

4. Online processing is most useful for which of these tasks?
   a. preparing payroll checks
   b. reconciling job-time tickets and time cards
   c. paying payroll tax obligations  
   d. making changes in employee benefit choices

Answer 4

d. making changes in employee benefit choices (Correct. Employees want to be
able to have access to this information and make changes whenever desired.)

Question 5

5. Use of a payroll service bureau or a PEO provides which of the
   following benefits?
   a. fewer staff needed to process payroll  
   b. lower cost of processing payroll
   c. less need for developing and maintaining payroll tax expertise
   d. all of the above

Answer 5

d. all of the above (Correct.)

Question 6

6. Which control procedure would be most effective in detecting the
   failure to prepare a paycheck for a new employee before paychecks are
   distributed? 
   a. validity checks on the employee number on each time card
   b.record counts of time cards submitted and time cards processed
   c. zero-balance check
   d. use of a separate payroll bank account

Answer 6

b.record counts of time cards submitted and time cards processed(Correct.
Batch totals, such as record counts, would identify failure to process all
transaction records.)  

Question 7

7. Which department should have responsibility for authorizing pay-rate
changes?
a. timekeeping 
b. payroll 
c. HRM 
d. accounting

Answer 7

c. HRM (Correct. HRM has no other role in the payroll process.)

Question 8

8. To maximize effectiveness of internal controls over payroll, which of the
   following persons should be responsible for distributing employee
   paychecks?
   a. departmental secretary
   b. payroll clerk
   c. controller
   d. departmental supervisor

Answer 8

a. departmental secretary (Correct. This person has no other payroll duties so
cannot conceal theft of paychecks.)

Question 9

9. Where should unclaimed paychecks be returned?  
   a. HRM department  
   b. cashier
   c. payroll department
   d. absent employee’s supervisor

Answer 9

b. cashier (Correct. This permits funds to be quickly redeposited.)

Question 10

10. Which of the following is an important supporting document to
    authorize the transfer of funds to the payroll bank account?
    a. earnings statement
    b. time card
    c. payroll register
    d. W-2 form

Answer 10

c. payroll register (Correct. This document summarizes the amount to be paid
to each employee and is sent to the accounts payable department for use in
preparing a disbursement voucher to authorize the transfer of funds to the
payroll account.)