Final Exam Flashcards
1) Which activity below is not performed by Human Resources management (HRM)? A) compensation B) training C) discharge D) recruitment and hiring
A) compensation
2) Which department should have the sole ability to provide information to the AIS about hiring, terminations, and pay rate changes? A) payroll B) timekeeping C) production D) HRM
D) HRM
3) Which of the following is generally not a major source of input to a payroll system?
A) payroll rate changes
B) time and attendance data
C) checks to insurance and benefits providers
D) withholdings and deduction requests from employees
C) checks to insurance and benefits providers
4) Who does the payroll system issue checks to?
A) employees and to banks participating in direct deposit
B) a company payroll bank account
C) government agencies
D) All of the above are correct.
A) employees and to banks participating in direct deposit
B) a company payroll bank account
C) government agencies
5) Experts estimate that, on average, the costs associated with replacing an employee are about \_\_\_\_\_\_\_\_ the employee's annual salary. A) one-quarter of B) one-half of C) one and one-half times D) twice
C) one and one-half times
6) For recording time spent on specific work projects, manufacturing companies usually use a A) job time ticket. B) time card. C) time clock. D) labor time card.
A) job time ticket.
7) Which of the following statements is false regarding the use of incentives, commissions and bonuses in the payroll system?
A) Using incentives, commissions, and bonuses requires linking the payroll system and the information systems of sales and other cycles in order to collect the data used to calculate bonuses.
B) Bonus/incentive schemes must be properly designed with realistic, attainable goals that can be objectively measured.
C) Incentive schemes can result in undesirable behavior.
D) All of the above are true.
D) All of the above are true.
8) Identify the item below that is not a desired result of an employee bonus systems.
A) Employees may recommend unnecessary services to customers in order to exceed set sales quotas and earn a bonus.
B) Employees may look for ways to improve service.
C) Employees may analyze their work environment and find ways to cut costs.
D) Employees may work harder and may be more motivated to exceed target goals to earn a bonus.
A) Employees may recommend unnecessary services to customers in order to exceed set sales quotas and earn a bonus.
9) \_\_\_\_\_\_\_\_ are used to transmit time and attendance data directly to the payroll processing system. A) Badge readers B) Electronic time clocks C) Magnetic cards D) none of the above
B) Electronic time clocks
10) Payroll deductions fall into the broad categories of ________ and ________.
A) payroll tax withholdings; voluntary deductions
B) unemployment; social security taxes
C) unemployment taxes; income taxes
D) voluntary deductions; income taxes
A) payroll tax withholdings; voluntary deductions
11) Which of the following is not classified as a voluntary deduction? A) pension plan contributions B) social security withholdings C) insurance premiums D) deductions for a charity organization
B) social security withholdings
12) Which type of payroll report contains information such as the employees' gross pay, payroll deductions, and net pay in a multicolumn format? A) payroll register B) deduction register C) employee earnings statement D) federal W-4 form
A) payroll register
13) Which type of payroll report lists the voluntary deductions for each employee? A) payroll register B) deduction register C) earnings statement D) federal W-4 form
B) deduction register
14) Which type of payroll report includes the details of the current paycheck and deductions as well as year-to-date totals? A) payroll register B) deduction register C) earnings statement D) federal W-4 form
C) earnings statement
15) An effective way an organization can eliminate paper paychecks while maintaining adequate accounting records is to A) pay in cash only. B) pay with money orders. C) use direct deposit. D) use Electronic Funds Transfer.
C) use direct deposit.
16) Companies that specialize in processing payroll are known as A) paycheck distribution companies. B) payroll service bureaus. C) professional employer organizations. D) semi-governmental organizations.
B) payroll service bureaus.
17) Which organization provides payroll processing as well as other HRM services, like employee benefit design and administration? A) title companies B) payroll service bureau C) professional employer organization D) paycheck distribution companies
C) professional employer organization
18) Which of the following is not a benefit of using a payroll service bureau or a professional employer organization? A) freeing up of computer resources B) increased internal control C) reduced costs D) wider range of benefits
B) increased internal control
19) Many companies offer their employees a "cafeteria" approach to voluntary benefits in which employees can pick and choose the benefits they want. This plan is normally called a(n) A) elective plan. B) menu options benefit plan. C) flexible benefit plan. D) buffet plan.
C) flexible benefit plan.
20) Pay rate information should be stored in A) employees' personnel files. B) employee subsidiary ledgers. C) the payroll master file. D) electronic time cards.
C) the payroll master file.
21) The payroll transaction file should contain A) entries to add new hires. B) time card data. C) changes in tax rates. D) All of the above are correct.
B) time card data.
22) The document that lists each employee's gross pay, payroll deductions, and net pay in a multicolumn format is called A) an employee earnings statement. B) the payroll register. C) a deduction register. D) an employee time sheet summary.
B) the payroll register.
23) As each payroll transaction is processed, the system should also
A) allocate labor costs to appropriate general ledger accounts
B) use cumulative totals generated from a payroll to create a summary journal entry to be posted to the general ledger
C) both A and B above
D) The HRM system should not perform either activity A or B.
C) both A and B above
24) Direct deposit of employee paychecks is one way an organization can improve efficiency and reduce payroll-processing costs. Which statement regarding direct deposit is false?
A) The cashier does not authorize the transfer of funds from the organization’s checking account to a payroll checking account.
B) The cashier does not have to sign employee paychecks.
C) Employees who are part of a direct deposit program receive a copy of their paycheck indicating the amount deposited.
D) Employees who are part of a direct deposit program receive an earnings statement on payday rather than a paper check.
A) The cashier does not authorize the transfer of funds from the organization’s checking account to a payroll checking account.
25) The employer pays a portion of some payroll taxes and employee benefits. Both the employee and employer pay which benefit or tax listed below? A) social security taxes B) federal income taxes C) state income taxes D) none of the above
A) social security taxes
26) Identify the following item that should contribute to the efficiency of a payroll system.
A) segregation of check distribution from payroll duties
B) prompt redeposit of unclaimed paychecks
C) a separate payroll bank account
D) direct deposit of checks
D) direct deposit of checks
27) Which of the following documents would be likely to yield the greatest cost saving by converting from paper to electronic? A) payroll register B) earnings statement C) deduction register D) time card
D) time card
34) A growing number of companies require some of their upper level executives to spend time performing job duties of rank-and-file employees. When the CEO of Loews Hotels assumed the role of bellman, he discovered
A) that the company’s polyester uniform caused him to sweat a great deal.
B) evidence of fraud in several hotel locations.
C) instances where company employees fell asleep on the job.
D) situations where employees were not treating customers properly.
A) that the company’s polyester uniform caused him to sweat a great deal.
35) Executive immersion experiences are important because
A) CEOs often have no idea what rank-and-file employees do on a daily basis.
B) employees who have positive attitudes contribute to increasing company profits.
C) many employees feel upper management is out of touch.
D) it is important for organizations to take social responsibility seriously.
B) employees who have positive attitudes contribute to increasing company profits.
37) Involving accountants in executive compensation plans is often especially helpful
A) in keeping track of the executive compensation plan.
B) in identifying the appropriate metrics to use when linking compensation to performance.
C) in reducing the total amount of compensation paid to executives.
D) in suggesting the appropriate amount of compensation executives should be paid.
B) in identifying the appropriate metrics to use when linking compensation to performance.
38) Accountants can help executive compensation plan boards
A) comply with legal and regulatory requirements.
B) by identifying the best ways to keep the details of compensation plans out of the hands of external parties.
C) avoid paying excessive amounts of “perks” to executives.
D) distribute information regarding how well each executive is performing their job.
A) comply with legal and regulatory requirements.
39) Form 941
A) is filed each quarter to reconcile monthly tax payments with total tax liability for the quarter.
B) is used in preparing labor-related reports for government agencies.
C) is used for employee information and annual payroll reports.
D) is used to document compliance with applicable regulations.
A) is filed each quarter to reconcile monthly tax payments with total tax liability for the quarter.
40) A workforce inventory report
A) is filed each quarter to reconcile monthly tax payments with total tax liability for the quarter.
B) is used in preparing labor-related reports for government agencies.
C) is used for employee information and annual payroll reports.
D) is used to document compliance with applicable regulations.
B) is used in preparing labor-related reports for government agencies.
41) Professional employer organizations (PEOs) are especially attractive to small and mid-sized businesses for all of the following reasons except A) reduced costs. B) wider range of benefits. C) freeing up computer resources. D) improved service quality.
D) improved service quality.
1) The sales department administrative assistant has been assigning phone order sales to her brother-in-law, a company sales person. Company policy is to pay commissions only on orders directly received by sales people, not on orders received over the phone. The resulting fraudulent commission payments might best have been prevented by requiring that
A) sales commission statements be supported by sales order forms signed by the customer and approved by the sales manager.
B) sales order forms be prenumbered and accounted for by the sales department manager.
C) sales orders and commission statements be approved by the accounting department.
D) disbursement vouchers for commission payments be reviewed by the internal audit department and compared to sales commission statements and sales orders.
A) sales commission statements be supported by sales order forms signed by the customer and approved by the sales manager.
) Because many HRM / payroll master databases typically contain only descriptive information (such as which employees possess which skills), many firms have deployed ________ to more effectively leverage employees knowledge and skills.
A) relational databases
B) knowledge management systems
C) Resources, Events, and Agents (REA) databases
D) cardinality systems
B) knowledge management systems
3) Identify the firm below where employees' knowledge is likely to be more valuable than the value of a company's tangible assets. A) international airline B) law firm C) automobile manufacturer D) railroad
B) law firm
5) Knowledge management systems (KMS) permit organizations to
A) store employee solutions to specific problems in a shared database.
B) learn from individuals external to the organization.
C) perform background checks on potential employees.
D) gain competitive business intelligence on competitors.
A) store employee solutions to specific problems in a shared database.
1) Why is a separate payroll account used to clear payroll checks?
A) for internal control purposes, to help limit any exposure to loss by the company
B) to make bank reconciliation easier
C) Banks don’t like to commingle payroll and expense checks.
D) All of the above are correct.
A) for internal control purposes, to help limit any exposure to loss by the company
2) The following control can reduce the distribution of fraudulent paychecks.
A) Have internal audit investigate unclaimed paychecks.
B) Allow department managers to investigate unclaimed paychecks.
C) Immediately mark “void” across all unclaimed paychecks.
D) Match up all paychecks with time cards.
A) Have internal audit investigate unclaimed paychecks.
3) When using electronic documents, \_\_\_\_\_\_\_\_ increase(s) the accuracy of data entry. A) access controls B) separation of duties C) general controls D) application controls
D) application controls
4) The most vital control in preventing unauthorized changes to the payroll master file is
A) hiring totally honest people to access and make changes to this file.
B) segregation of duties between the preparation of paychecks and their distribution.
C) segregation of duties between the authorization of changes and the physical handling of paychecks.
D) having the controller closely review and then approve any changes to the master file.
C) segregation of duties between the authorization of changes and the physical handling of paychecks.
5) Which of the following is not a potential effect of inaccurate data on employee time cards?
A) increased labor expenses
B) erroneous labor expense reports
C) damaged employee morale
D) inaccurate calculation of overhead costs
D) inaccurate calculation of overhead costs
6) Which control would be most appropriate to address the problem of inaccurate payroll processing?
A) encryption
B) direct deposit
C) cross-footing of the payroll register
D) an imprest payroll checking account
C) cross-footing of the payroll register
7) The purpose of a general ledger payroll clearing account is
A) to check the accuracy and completeness of payroll recording and its allocation to cost centers.
B) to make the bank reconciliation easier.
C) to make sure that all employees are paid correctly each week.
D) to prevent the cashier from having complete control of the payroll cycle.
A) to check the accuracy and completeness of payroll recording and its allocation to cost centers.
8) A “zero balance check” refers to which of the following control procedures?
A) a type of batch total
B) cross-footing the payroll register
C) the payroll clearing account shows a zero balance once all entries are posted
D) trial balance showing that debits equal credits
C) the payroll clearing account shows a zero balance once all entries are posted
9) All of the following are controls that should be implemented in a payroll process, except
A) supervisors distribute paychecks since they should know all employees in their department.
B) someone independent of the payroll process should reconcile the payroll bank account.
C) sequential numbering of paychecks and accounting for the numbers.
D) restrict access to blank payroll checks and documents.
A) supervisors distribute paychecks since they should know all employees in their department.
10) What is the best control to reduce the risk of losing payroll data?
A) passwords
B) physical security controls
C) backup and disaster recovery procedures
D) encryption
C) backup and disaster
11) The threat of violation of employment laws relates directly to which activity? A) payroll processing B) collecting employee time data C) hiring and recruiting D) all of the above
C) hiring and recruiting
12) What is a potential threat to the specific activity of payroll processing?
A) hiring unqualified employees
B) poor system performance
C) violations of employment laws
D) unauthorized changes to the payroll master file
D) unauthorized changes to the payroll master file
13) 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?
A) proper segregation of duties
B) automation of data collection
C) sound hiring procedures
D) review of appropriate performance metrics
B) automation of data collection
14) Which of the following is a control that can be implemented to help prevent paychecks being issued to a “phantom” or “ghost” employee?
A) The cashier should sign all payroll checks.
B) Sequentially prenumber all payroll checks.
C) Use an imprest account to clear payroll checks.
D) Paychecks should be physically distributed by someone who does not authorize time data or record payroll.
D) Paychecks should be physically distributed by someone who does not authorize time data or record payroll.
15) The average annual management salary at Iyov Management is $80,000. If the average turnover rate for employees is ten per year, what is the approximate average annual cost of turnover? A) $80,000 B) $400,000 C) $800,000 D) $1,200,000
D) $1,200,000
16) Which of the following will limit a firm’s potential loss exposure from paycheck forgery?
A) segregation of check distribution from payroll duties
B) prompt redeposit of unclaimed paychecks
C) a separate payroll bank account
D) direct deposit of checks
C) a separate payroll bank account
17) Which of the following is a control that addresses the threat of unauthorized changes to the payroll master file? A) field checks B) batch totals C) segregation of duties D) sound hiring procedures
C) segregation of duties
25) Using financial incentives requires organizations to
A) pay employees less than they would have to if pay was a fixed salary.
B) better monitor employee attendance.
C) link the payroll system to other cycles to calculate incentive payments.
D) better monitor employee effort.
C) link the payroll system to other cycles to calculate incentive payments.
26) Source data automation is often effective in reducing A) unintentional errors. B) intentional errors. C) accuracy. D) theft.
C) accuracy.
27) A payroll clearing account is used to
A) check the accuracy of payroll costs.
B) speed up payroll transaction processing.
C) reduce the transaction costs associated with payroll transaction processing.
D) eliminate the need to manually record payroll transactions.
A) check the accuracy of payroll costs.
28) All of the following regarding payroll checks is correct except
A) access to payroll checks should be restricted.
B) payroll checks should be sequentially pre-numbered.
C) payroll checks should be drawn on the organization’s regular bank account(s).
D) the cashier should sign payroll checks.
C) payroll checks should be drawn on the organization’s regular bank account(s).
29) Falk Noam is the internal auditor for Matan Incorporated. Before investigating the HRM / payroll cycle at Matan, Falk decided to read up on the proper segregation of duties regarding payroll disbursement processes. For strongest segregation of duties, the \_\_\_\_\_\_\_\_ should distribute paychecks. A) accounts payable department B) cashier C) internal audit department D) external auditor
B) cashier
30) Falk Noam is the internal auditor for Matan Incorporated. Before investigating the HRM / payroll cycle at Matan, Falk decided to read up on the proper segregation of duties regarding payroll disbursement processes. For strongest segregation of duties, the \_\_\_\_\_\_\_\_ should record payroll. A) accounts payable department B) cashier C) internal audit department D) external auditor
A) accounts payable department
31) Falk Noam is the internal auditor for Matan Incorporated. Before investigating the HRM / payroll cycle at Matan, Falk decided to read up on the proper segregation of duties regarding payroll disbursement processes. For strongest segregation of duties, the \_\_\_\_\_\_\_\_ should periodically observe the paycheck distribution process. A) accounts payable department B) cashier C) internal audit department D) external auditor
C) internal audit department
1) The general ledger and reporting system consists of the ________ involved in ________ the general ledger and ________ reports.
A) business transactions; updating; processing
B) data processing; business transactions for; printing
C) information processing; updating; creating
D) business transactions; data processing; preparing
C) information processing; updating; creating
2) Which item below is not considered a major input to the general ledger and reporting system?
A) summary entries from the major subsystems
B) reports from managers
C) adjusting entries
D) financing and investing activities
B) reports from managers
3) Who should provide the adjusting entries in a well-designed general ledger and reporting system? A) various user departments B) the treasurer's area C) the other major AIS subsystems D) the controller's area
D) the controller’s area
4) Which of the following user groups generally receive information produced by the general ledger and reporting system?
A) internal users
B) external users
C) inquiry processing by internal or external users
D) all of the above
D) all of the above
5) The general ledger system of an organization should be designed to serve the information requirements of both internal and external users. This means that the system should support
A) producing expansive regular periodic reports to cover all information needs.
B) the real-time inquiry needs of all users.
C) producing regular periodic reports and respond to real-time inquiry needs.
D) access by investors and creditors of the organization to general ledger balances.
C) producing regular periodic reports and respond to real-time inquiry needs.
6) Identify the most correct statement with regard to how the various accounting subsystems update the general ledger.
A) Individual journal entries for each accounting subsystem transaction update the general ledger every 24 hours.
B) Summary journal entries that represent the results of all transactions for a certain time period are used to update the general ledger.
C) The controller or treasurer must approve accounting subsystem journal entries before any updating may occur.
D) Nonroutine transactions are entered into the system by the treasurer’s office.
B) Summary journal entries that represent the results of all transactions for a certain time period are used to update the general ledger.
7) When updating the general ledger, sales, purchases, and production are examples of ________ entries, and issuance or retirement of debt and the purchase or sale of investment securities are examples of ________ entries.
A) adjusting; controller originated
B) accounting subsystem; treasurer originated
C) adjusting; special journal
D) controller generated; special journal
B) accounting subsystem; treasurer originated
8) Which of the following are used to document entries made to update the general ledger? A) general journal B) subsidiary journal C) subsidiary ledgers D) journal vouchers
D) journal vouchers
9) Not all journal entries affect cash flow. Adjusting entries that reflect events that have already occurred, but have no effect on cash, are classified as A) accruals. B) deferrals. C) revaluations. D) corrections.
A) accruals.
10) Recording interest earned on an investment is an example of which type of adjusting journal entry? A) accrual entry B) deferral entry C) revaluation entry D) correcting entry
A) accrual entry
11) Identify the adjusting entry that is made at the end of an accounting period to reflect an exchange of cash prior to the performance of a related event is classified as a(n) A) accrual entry. B) deferral entry. C) revaluation entry. D) correcting entry.
B) deferral entry.
12) Depreciation expense and bad debt expense are examples of which type of adjusting journal entry? A) deferrals B) accruals C) revaluations D) estimates
D) estimates
13) Adjusting entries that are made to reflect differences between the actual and recorded value of an asset or a change in accounting principle are called A) reconciliations. B) revaluations. C) estimates. D) accruals.
B) revaluations.
14) Adjusting entries that are made to counteract the effects of errors found in the general ledger are called A) accruals. B) corrections. C) deferrals. D) estimates.
B) corrections.
15) Corrections are entries made to correct errors found in A) all journals. B) special journals. C) the general ledger. D) the financial statements.
C) the general ledger.
16) Immediately after the adjusting entries are posted, the next step in the general ledger and reporting system is to prepare A) an adjusted trial balance. B) closing entries. C) financial statements. D) an unadjusted trial balance.
A) an adjusted trial balance.
17) Financial statements are prepared in a certain sequence. Which statement is prepared last? A) the adjusted trial balance B) the income statement C) the balance sheet D) the statement of cash flows
D) the statement of cash flows
18) A listing of journal vouchers by numerical sequence, account number, or date is an example of A) a general ledger control report. B) a budget report. C) a batch to be processed. D) responsibility accounting.
A) a general ledger control report.
19) Who generally is responsible for providing the accounting department with information about financing and investing activities to create the appropriate general ledger journal entries? A) budget department B) controller C) treasurer D) chief executive officer
C) treasurer
20) Adjusting entries that are made to recognize revenue that has been received but not yet earned are classified as A) estimates. B) deferrals. C) accruals. D) revaluations.
B) deferrals.
21) Adjusting entries that reflect a change in accounting principle used to value inventories are classified as A) corrections. B) estimates. C) deferrals. D) revaluations.
D) revaluations.
1) If you believe not all adjusting entries were posted in the general ledger, you should prepare a general ledger control report listing journal vouchers in
A) numerical sequence.
B) chronological order.
C) general ledger account number order.
D) any order, since you have to review them all anyway.
A) numerical sequence.
2) If you believe a general ledger account was not adjusted properly or at all, you should prepare a general ledger control report listing journal vouchers in
A) numerical sequence.
B) chronological order.
C) general ledger account number order.
D) any order, since you have to review them all anyway.
C) general ledger account number order.
3) Which of the following are appropriate controls for the general ledger and reporting system?
A) using well-designed documents and records
B) online data entry with the use of appropriate edit checks
C) prenumbering documents and accounting for the sequence numbers
D) All of the above are appropriate.
D) All of the above are appropriate.
4) A type of data entry control that would ensure that adjusting entries are posted to existing general ledger accounts is called a(n) \_\_\_\_\_\_\_\_ check. A) validity B) existence C) closed loop verification D) reasonableness
A) validity
5) One way of ensuring that recurring adjusting journal entries are made each month would be to
A) make all the entries a month in advance.
B) rotate the responsibility among the accounting staff.
C) program the entries to be made automatically.
D) create a standard adjusting journal entry file.
D) create a standard adjusting journal entry file.
6) Which of the following tasks are facilitated by maintaining a strong and secure audit trail?
A) tracing a transaction from original source document to the general ledger to a report
B) tracing an item in a report back through the general ledger to the original source document
C) tracing changes in general ledger accounts from beginning to ending balances
D) All of the above are facilitated by the audit trail.
D) All of the above are facilitated by the audit trail.
7) Marina Filimena is an accountant at Jasmina Hair Products. Marina received the following error message while making an adjusting entry to the general ledger: "The account number referenced in your journal entry does not exist. Create a new account?" This is an example of a A) validity check. B) closed loop verification. C) zero-balance check. D) completeness test.
A) validity check.
8) Marina Filimena is an accountant at Jasmina Hair Products. Marina received the following error message while making an adjusting entry to the general ledger: "Your journal entry must be a numeric value. Please reenter." This is an example of a A) validity check. B) field check. C) zero-balance check. D) completeness test.
B) field check.
9) Marina Filimena is an accountant at Jasmina Hair Products. Marina received the following error message while making an adjusting entry to the general ledger: "The amounts debited and credited are not equal. Please correct and try again." This is an example of a A) validity check. B) field check. C) zero-balance check. D) completeness test.
C) zero-balance check.
10) Marina Filimena is an accountant at Jasmina Hair Products. Marina received the following error message while making an adjusting entry to the general ledger: "The data you have entered does not include a source reference code. Please enter this data before saving." This is an example of a A) validity check. B) field check. C) zero-balance check. D) completeness test.
D) completeness test.
13) Identify one way “rainbow tables” are often used.
A) to discover plaintext passwords associated with a hash
B) to integrate different tables into one, master table
C) to perform a zero-balance check
D) to ensure referential integrity of all the associated tables
A) to discover plaintext passwords associated with a hash
14) What system privileges should an employee involved in the general ledger and reporting system be given?
A) general privileges to create, delete, update, or modify data
B) no privileges permitting the creation, deletion, updating, or modification of data
C) only the specific privileges necessary to perform an employee’s assigned duties
D) read-only privileges
C) only the specific privileges necessary to perform an employee’s assigned duties
15) What control procedure(s) should be used to reduce the risk of unauthorized disclosure of the financial statements? A) multifactor authentication B) physical security C) encryption D) all of the above
D) all of the above
