Chapter 6: the Expenditure Cycle II: Payroll Processing and Fixed Asset Procedures

Question 1

The document that captures the total amount
of time that individual workers spend on each
production job is called a

a. time card.
b. job ticket.
c. personnel action form
d. labor distribution form

Answer 1

b. job ticket

Question 2

An important reconciliation in the payroll system is when

a. the general ledger department compares
the labor distribution summary from cost
accounting to the disbursement voucher
from AP.

b. the personnel department compares the number of employees authorized to receive a paycheck to the number of paychecks prepared.

c. the production department compares the
number of hours reported on job tickets to
the number of hours reported on time cards.

d. the payroll department compares the labor
distribution summary to the hours reported
on time cards.

Answer 2

a. the general ledger department compares
the labor distribution summary from cost
accounting to the disbursement voucher
from AP.

Question 3

Which internal control is not an important part of the payroll system?

a. supervisors verify the accuracy of employee
time cards

b. paychecks are distributed by an independent paymaster

c. the AP department verifies the accuracy of
the payroll register before transferring payroll funds to the general checking account

d. the general ledger department reconciles the
labor distribution summary and the payroll
disbursement voucher

Answer 3

a. supervisors verify the accuracy of employee
time cards

Question 4

The department responsible for approving pay rate changes is

a. payroll
b. treasurer
c. personnel
d. cash disbursements

Answer 4

c. personnel

Question 5

Which function should distribute paychecks?

a. personnel
b. timekeeping
c. paymaster
d. payroll

Answer 5

c. paymaster

Question 6

Which transaction is not processed in the fixed
asset system?

a. purchase of building

b. repair of equipment

c. purchase of raw materials

d. sale of company van

Answer 6

c. purchase of raw materials

Question 7

Depreciation

a. is calculated by the department that uses
the fixed asset.

b. allocates the cost of the asset over its useful
life.

c. is recorded weekly.

d. results in book value approximating fair
market value

Answer 7

b. allocates the cost of the asset over its useful
life

Question 8

Depreciation records include all of the following information about fixed assets EXCEPT the

a. economic benefit of purchasing the asset.

b. cost of the asset.

c. depreciation method being used.

d. location of the asset.

Answer 8

a. economic benefit of purchasing the asset.

Question 9

Which control is not a part of the fixed asset
system?

a. formal analysis of the purchase request

b. review of the assumptions used in the capital budgeting model

c. development of an economic order quantity
model

d. estimates of anticipated cost savings

Answer 9

c. development of an economic order quantity
model

Question 10

10. Objectives of the fixed asset system do NOT
    include

a. authorizing the acquisition of fixed assets.

b. recording depreciation expense.

c. computing gain and/or loss on the disposal
of fixed assets.

d. maintaining a record of the fair market
value of all fixed assets

Answer 10

d. maintaining a record of the fair market
value of all fixed assets

Question 11

Which of the following is NOT a characteristic of the fixed asset system?

a. acquisitions are routine transactions requiring general authorization

b. retirements are reported on an authorized
disposal report form

c. acquisition cost is allocated over the expected
life of the asset

d. transfer of fixed assets among departments is
recorded in the fixed asset subsidiary ledger

Answer 11

a. acquisitions are routine transactions requiring general authorization