PAYROLL

Question 1

Why Accounting for Labor differs from Materials?

Answer 1

1. Different employees require different procedures, from piece meal to hourly to commissioned ones. Unlike in Materials, purchases are different but they apply same procedures.
2. Payroll Procedures occur in a weekly, daily, bimonthly or in a commissioned basis. Materials on the hand, depends on their level of activity.
3. Payroll requires special controls for some labor activities are usually not easily seen compared to materials. `

Question 2

Do payroll procedures vary between entities, and is there a common pattern in payroll systems?

Answer 2

Yes, payroll procedures vary by entity, but they follow a common pattern that forms the core activities of the payroll system.

Question 3

It prepares and submits Personnel action forms in preparing payroll function.

Answer 3

Personnel department

Question 4

are documents which the employee’s Pay rate, Deductions, Job Classification and others. An example is a personnel action form used to advice payroll of an increase in an employee’s salary

Answer 4

Personnel Action Forms

Question 5

It prepares Time cards and Job Tickets to record employee performance.

Answer 5

Production Department

Question 6

keep track of the employees’ hours working on the job. The card is punched through a special timekeeping device that records their time of going in and out of the establishment.

Answer 6

Time cards

Question 7

keep track of the employee hours spent on the job; it also indicates how many they have made on each product job.

Answer 7

Job Tickets

Question 8

What documents are collected to determine costs and summarize total charges for posting to ledger accounts?

Answer 8

Time cards and job tickets

Question 9

it collects the data from the personnel department (to determine salary rate and also to determine the employee’s tax level) and from the Production department (to determine total hours/days worked) and performs the following:
1. Prepares the payroll register showing Gross Pay, Withholding taxes and the Net Pay.
2. Entering the information to employee records.
3. Prepares the employee paychecks (salary or wage).
4. Sending the Pay slips to appropriate distribution Department.
5. And Finally, Filing the data. (Forms, copy of Payroll register)

Answer 9

Payroll Department

Question 10

It is the one who sends a copy of the check along with the disbursement voucher and the payroll register to the AP department, where they are filed (not shown).

Answer 10

Clerk

Question 11

Where does the department deposit the total amount of the payroll after preparing a single check?

Answer 11

Payroll Imprest Account

Question 12

It must be transferred from the general cash account to this Payroll Imprest Account before the paychecks can be cashed

Answer 12

Funds

Question 13

It is prepared and sent to the general ledger function

Answer 13

Journal Voucher

Question 14

Which department receives the labor distribution summary, disbursement voucher, and journal voucher in the payroll process?

Answer 14

General Ledger Function

Question 15

What are the risks involving Payroll?

Answer 15

1. A person who involves in distribution of payroll who also involves in preparation of it may deliberately manipulate employee hours.
2. Outdated personnel information would lead to giving time cards to former employees.
3. Redundant employee information would result in giving paychecks more than once.

Question 16

How can the management avoid it?

Answer 16

1. The Personnel department must keep track of employee info; it must be updated in order to verify the employees which are to receive paychecks.
2. The duties for Personnel Information, Authorization and Distribution must be given to different persons and each person must work independently to others.
3. Time clocks must be supervised, Job tickets must be checked if the information reconciles with the Job requirement for the day.
4. Checking the accounting records.

Question 17

What is the term for the collection of documents that includes time cards, job tickets, disbursement vouchers, journal information, subsidiary ledger accounts, and general ledger accounts in payroll?

Answer 17

Audit Trail

Question 18

True or False:

Control over access to all journals, ledgers, and the source documents in the payroll system is not important.

Answer 18

False, it is important since it is in all expenditure cycle systems

Question 19

Give an examples of independent verification controls in the payroll system

Answer 19

Verification of Time
Paymaster
Accounts Payable
General Ledger
The labor distribution summary and the payroll disbursement voucher.

Question 20

In both manual and automated payroll systems, where do payroll authorization and hours worked originate from?

Answer 20

Personnel and Production departments

Question 21

What does the payroll department do with the information it receives from personnel and production?

Answer 21

It reconciles the information, calculates the payroll, and distributes paychecks to employees.

Question 22

How does cost accounting use the time spent on each job in the payroll process?

Answer 22

It receives this information from production and uses it for posting to the Work-in-Progress (WIP) account.

Question 23

What happens when AP receives payroll summary information from the payroll department?

Answer 23

AP authorizes the cash disbursements department to deposit a single check, equal to the total payroll amount, into a bank imprest account for payroll.

Question 24

How does the general ledger department handle the summary information from cost accounting and AP?

Answer 24

The general ledger department reconciles the information and updates control accounts to reflect these transactions.

Question 25

It must keep track of employee info; it must be updated in order to verify the employees which are to receive paychecks.

Answer 25

Personnel department

Question 26

Before sending time cards to payroll, the supervisor must verify their accuracy and sign them.

Answer 26

Verification of time

Question 27

The use of an independent paymaster to distribute checks (rather than the normal supervisor) helps verify the existence of the employees. The supervisor may be party to a payroll fraud by pretending to distribute paychecks to nonexistent employees.

Answer 27

Paymaster

Question 28

The AP clerk verifies the accuracy of the payroll register before creating a disbursement voucher that transfers funds to the imprest account.

Answer 28

Accounts Payable

Question 29

The general ledger department provides verification of the overall process by reconciling

Answer 29

General Ledger

Question 30

They receives hard copy of the personnel action forms, job tickets, and time cards, which it converts to digital files.

Answer 30

Data Processing Department

Question 31

It perform the check writing, detailed record keeping, and general ledger functions

Answer 31

Batch computer programs

Question 32

This system captures and processes a wide range of personnel - related data, including employee benefits, labor resource planning, employee relations, employee skills, and personnel actions (pay rates, deductions, and so on), as well as payroll.

Answer 32

HRM system

Question 33

This system need to provide real-time access to personnel files for purposes of direct inquiries and recording changes in employee status as they occur.

Answer 33

HRM system

Question 34

It is distributed to various work in progress, overhead, and expense accounts

Answer 34

Labor costs

Question 35

It is created from the attendance file and the employee file.

Answer 35

Online payroll register

Question 36

True or False:
The employee records file is updated.

Answer 36

True

Question 37

It is sent to the treasurer for review and reconciliation with the payroll register.

Answer 37

Payroll checks

Question 38

Enumerate the 3 phases of Fixed Asset System

Answer 38

Acquisition, Maintenance and Disposal

Question 39

he will evaluate if the entity needs to purchase an asset for new installations or for replacement; which the asset value depends on the limit set by the management.

Answer 39

Department Manager

Question 40

It must be calculated accurately to reflect the actual decline of use

Answer 40

Depreciation rate

Question 41

It must be disposed if it reached the end of its useful life

Answer 41

Asset

Question 42

What document is sent to the fixed asset accounting department to authorize the removal of an asset from the ledger?

Answer 42

Disposal Report

Question 43

It automatically updates the fixed asset control account in the general ledger and prepares journal vouchers for the general ledger department as evidence of the entry

Answer 43

Fixed Asset System

Question 44

It uses the depreciation schedules to record end-of-period depreciation transactions automatically.

Answer 44

Fixed Asset System

Question 45

It contains details of the deletion is sent to the fixed asset department for review.

Answer 45

Fixed Asset Status Report

Question 46

What are the risks involving Fixed Assets?

Answer 46

1. Faulty authorization controls would lead to purchases of items that would cost a big loss (waste) to the firm.
2. Fixed assets are usually idle and can be susceptible to theft.
3. Misappropriation of assets used in production would lead to misstated balances.

Question 47

It would lead to purchases of items that would cost a big loss (waste) to the firm.

Answer 47

Faulty Authorization Controls

Question 48

It usually idle and can be susceptible to theft

Answer 48

Fixed assets

Question 49

It would lead to misstated balances.

Answer 49

Misappropriation of assets used in production

Question 50

How can the management avoid it? in Fixed Asset Control.

Answer 50

1. The must be an individual who will independently verify the request approvals like signatures, especially when the requests contain high-value items.
2. Department supervisors must ensure that the assets in the department are used appropriately and accordingly. The supervisors must also make sure that the fixed assets aren’t taken home by the employees unless approved by the management. A frequent inspection of fixed assets can also help in minimizing theft.
3. The management must keep physical records of purchases and depreciation methods used to provide an effective audit trail.
4. The computer department must implement effective security measures (like 2FA) to bar unauthorized persons to access the system.

Question 51

They must ensure that the assets in the department are used appropriately and accordingly

Answer 51

Department supervisors

Question 52

They must make sure that the fixed assets aren’t taken home by the employees unless approved by the management.

Answer 52

Supervisors

Question 53

True or False:

A few inspection of fixed assets can also help in minimizing theft.

Answer 53

False, a frequent inspection.

Question 54

This department must implement effective security measures (like 2FA) to bar unauthorized persons to access the system

Answer 54

Computer department