1. Traditionally, accountants have been most d.

all of the above-

involved with which portion of the HRM/
6. Which control procedure would be most
payroll cycle?
effective in detecting the failure to prepare a
a. hiring paycheck for a new employee before paychecks are
distributed?
b. payroll -
a. validity checks on the employee number on each
c. training time card

d. performance evaluation b. record counts of time cards submitted and time

cards processed -
2. Which of the following statements is true?
c. zero-balance check
a. Financial statements report the value of employee
knowledge and skills. d. use of a separate payroll bank account

b. Turnover and absenteeism are costly.- 7. Which department should have responsibility for
authorizing pay-rate changes?
c. All employees must fill out time cards.
a. timekeeping
d. Default configurations of ERP packages typically
provide good segregation of duties. b. payroll

3. Which document lists the current amount and c. HRM -

year-to-date totals of gross pay, deductions, and
net pay for one employee? d. accounting

a. payroll register 8. To maximize effectiveness of internal controls

over payroll, which of the following persons should
b. time card be responsible for distributing employee
paychecks?
c. paycheck
a. departmental secretary -
d. earnings statement-
b. payroll clerk
4. Online processing is most useful for which of
these tasks? c. controller

a. preparing payroll checks d. departmental supervisor

b. reconciling job-time tickets and time cards 9. Where should unclaimed paychecks be returned?

c. paying payroll tax obligations a. HRM department

d. making changes in employee benefit choices- b. cashier -

5. Use of a payroll service bureau or a PEO provides c. payroll department

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. absent employee's supervisor
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
11. Payroll service bureaus and professional
employer organizations offer the following
advantages:
a. reduced costs.
b. frees up computer resources.
c. wider range of benefits.
d. All of the above. -
e. None of the above.
12. Which of the following is NOT an objective of
the HRM/Payroll cycle?
a. Payroll transactions are all valid
b. Payroll transactions are all authorized
c. Cash and data are safeguarded
d. All transactions are accurately recorded.
e. All employee background checks are made.-
13. Prenumbering and periodically accounting for
all payroll checks and review of all EFT direct
deposit transactions reduce the threat of
a. poor performance.
b. inaccurate time data.
c. loss or alteration of data.
d. inaccurate processing of payroll.
e. fraudulent distribution of payroll checks.-
14. Resumes are key to finding the appropriate
employee for a specific job. Resumes:
a. should be created with the idea that the
employers will verify the information contained on
them. -
b. have been found to contain false or embellished
information 30% of the time. -
c. are ineffective in finding a job.
d. two of the above. -
e. None of the above.
15. Unauthorized payroll changes can be minimized
by the use of which control?
a. Batch totals
b. Segregation of functions -
c. Backup procedures
d. Review of IRS regulations
e. None of the above.
16. A data entry program for the Human Resource
and Payroll cycles should include which of the
following edit checks?
a. Field checks
b. Limit checks
c. Validity checks
d. All of the above. -
e. None of the above.
17. Which control procedure(s) do NOT address the
threat of payroll errors?
a. Batch totals
b. Cross-footing the payroll register
c. A payroll clearing account
d. Pre-numbering payroll checks-
18. Which controls apply to reducing the threat of
unauthorized changes to payroll master file?
a. Access to blank checks is restricted
b. Source data automation for data capture
c. Access controls -
d. Supervisory review of payroll register and other
reports
e. All of the above.
19. What decision(s) are NOT facilitated by Human 23. Accounting Information Systems (AIS) has
Resource Cycle information? traditionally been used to measure and human
resources.
a. Future workforce staffing needs -
a. True
b. Employee performance -
b. False-
c. Employee morale
24. Employee morale has no financial impact.
d. Payroll processing
a. True
e. Sales forecasting
b. False-
f. Two of the above-
25. Edit checks apply to the payroll process.
20. Technique(s) used to improve employee
performance include a. True-

a. careful monitoring of productivity. b. False

b. training. 26. An earnings statement is usually accompanied

c. Answers 1 and 2 are correct. -
d. None of the above.
21. Which of the following checks are useful in
detecting inaccuracies in time and attendance
records?
a. Validity checks on employee numbers
b. Limit checks on hours worked
c. Reasonableness tests of production data, such as
comparing the quantity produced with the master
production schedule
d. Batch totals
e. All of the above.-
22. Unauthorized disclosure of payroll information
can be minimized through which of the following
technique(s)?
a. Logical access controls
b. Encryption
c. Physical Access controls
d. Data transmission controls
e. All of the above.-
by a deduction register.
a. True
b. False-
27. The use of an imprest checking account for
payroll can reduce the threat of theft or fraudulent
distribution of paychecks.
a. True-
b. False
28) Which activity below is not performed by the
HRM?
A) compensation-
B) training
C) discharge
D) recruitment and hiring
29 ) 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.
30. ) 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-
31) Which of the following is not one of the major
sources of input to the 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
32) In the payroll system, checks are issued 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.-
33) Experts estimate that on average the costs
associated with replacing an employee are about
________ that of the employee's annual salary.
A) one-quarter
B) one-half
C) one and one-half-
D) twice
34) 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.
35) Regarding the use of incentives, commissions
and bonuses in payroll, which of the following
statements is false?
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.-
36) What is not a desired result of an employee
bonus/incentive system?
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
37. These 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
38) 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
39. Which of the following deductions is not
classified as a voluntary deduction?
A) pension plan contributions
B) social security withholdings-
C) insurance premiums
D) deductions for a charity organization
40) 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
41) 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
42) 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
43) 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.
44) One good way to eliminate paper paychecks is
to
A) pay in cash only.
B) pay with money orders.
C) use direct deposit.-
D) use Electronic Funds Transfer.
45) What step can be taken to 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
46) 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
47) This organization provides payroll processing as
well as other HRM services, such as employee
benefit design and administration.
A) Cashier
B) Payroll service bureau
C) Professional employer organization-
D) Paycheck distribution companies
48) 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
49) 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.
50) Pay rate information is stored in
A) employees' personnel files.
B) employee subsidiary ledgers.
C) the payroll master file.-
D) electronic time cards
51) The payroll transaction file would contain
A) entries to add new hires.
B) time card data.-
C) changes in tax rates.
D) All of the above are correct.
52) 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
53) As the payroll system processes each payroll
transaction, the system should also perform which
activity listed below?
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
54) 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
55) 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
56) When using electronic documents,
________ increase the accuracy of data entry.
A) access controls
B) separation of duties
C) general controls
D) application controls-
57) The key to 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
58) 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-
59) 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
60) What is the purpose of a general ledger
payroll clearing account?
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
61) 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
62) 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.
63) 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
64) 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
65) 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-
66) 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
67) 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.-
68) The average annual middle-management
salary at Folding Squid Technologies is
$60,000. If the average turnover rate for
middle management is ten employees per
year, what is the approximate average annual
cost of turnover?
A) $300,000
B) $600,000
C) $900,000-
D) $1,200,000
69) Which of the following will 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-
70) 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
71) 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
72) 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-
73. 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
74. An important reconciliation in the payroll
system is
a. general ledger compares the labor
distribution summary from cost accounting to
the disbursement voucher from accounts
payable-
b. personnel compares the number of
employees authorized to receive a paycheck to
the number of paychecks prepared
c. production compares the number of hours
reported on job tickets to the number of hours
reported on time cards
d. payroll compares the labor distribution
summary to the hours reported on time cards
75. 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. Accounts payable verifies the accuracy of the
payroll register before transferring payroll funds
to the general checking accounting.-
d. General ledger reconciles the labor
distribution summary and the payroll
disbursement voucher.
76. Which transaction is not processed in the
Fixed Asset System?
a. purchase of building
b. improvement of equipment
c. purchase of raw materials-
d. sale of company van
77. 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
78. Depreciation records include all of the
following information about fixed assets
except
a. the economic benefit of purchasing the asset-
b. the cost of the asset
c. the depreciation method being used
d. the location of the asset
79. 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
80. 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 disposal of
fixed assets
d. maintaining a record of the fair market value
of all fixed assets-
81. 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.
82. In the payroll subsystem, which function
should distribute paychecks?
a. personnel
b. timekeeping
c. paymaster-
d. payroll
83. Where does the responsibility lie for
reconciling the labor distribution summary and
the payroll disbursement voucher?
a. cash disbursements
b. cost accounting
c. personnel
d. general ledger-
84. Which of the following statements is not
true?
a. Routine payroll processing begins with the
submission of time cards.
b. Payroll clerks must verify the hours reported
on the time cards.-
c. Payroll reconciles personnel action forms
with time cards and prepares paychecks.
d. Cash disbursements signs paychecks and
forwards them to the paymaster for
distribution.
85. In a manufacturing firm, employees use
time cards and job tickets. Which of the
following statements is not correct?
a. Job tickets are prepared by employees for
each job worked on, so an employee may have
more that one job ticket on a given day.
b. An individual employee will have only one
time card.
c. The time reported on job tickets should
reconcile with the time reported on time cards.
d. Paychecks should be prepared from the job
tickets.-
86. Which department is responsible for
approving changes in pay rates for employees?
a. payroll
b. treasurer
c. personnel-
d. cash disbursements
87. Which of the following situations
represents a serious control weakness?
a. Timekeeping is independent of the payroll
department.
b. Paychecks are distributed by the employees
immediate supervisor.-
c. Time cards are reconciled with job tickets.
d. Personnel is responsible for updating
employee records, including creation of records
for new hires.
88. Why would an organization require the
paymaster to deliver all unclaimed paychecks
to the internal audit department?
a. to detect a "phantom employee" for whom a
check was produced-
b. to prevent an absent employee's check from
being lost
c. to avoid paying absent employees for payday
d. to prevent the paymaster from cashing
unclaimed checks
89. Which of the following is not a reasonable
control for fixed assets?
a. Proper authorization is required for
acquisition and disposal of fixed assets.
b. Fixed asset records show the location of each
asset.
c. Fully depreciated assets are immediately
disposed of.-
d. Depreciation policies are in writing.
90. Cost accounting updates work-in-process
accounts from
a. time cards
b. the labor distribution summary
c. job tickets-
d. personnel action forms
91. Payroll uses time card data to do all of the
following except
a. prepare the payroll register
b. update employee payroll records
c. prepare the labor distribution summary-
d. prepare paychecks
92. Payroll checks are typically drawn on
a. the regular checking account
b. a payroll imprest account-
c. a wages payable account
d. petty cash
93. The personnel action form provides
authorization control by
a. preventing paychecks for terminated
employees
b. verifying pay rates for employees
c. informing payroll of new hires
d. all of the above-
94. Accounting records that provide the audit
trail for payroll include all of the following
except
a. time cards
b. job tickets
c. payroll register
d. accounts payable register-
95. Personnel actions forms are used to do all
of the following except
a. activate new employees
b. terminate employees
c. record hours worked-
d. change pay rates
96. The payroll department performs all of the
following except
a. prepares the payroll register
b. distributes paychecks-
c. updates employee payroll records
d. prepares paychecks
97. The document that records the total
amount of time spent on a production job is
the
a. time card
b. job ticket
c. labor distribution summary-
d. personnel action form
98. A control technique that can reduce the
risk of a terminated employee being paid is
a. a security camera viewing the time clock
b. the supervisor taking role during the shift
c. paychecks being distributed by an
independent paymaster-
d. reconciliation of time cards and job tickets
99. Accounts payable
a. signs paychecks
b. prepares the payroll voucher-
c. reconciles time cards and employee records
d. distributes paychecks to employees
100. All of the following are processed by the
Fixed Asset System except
a. sale of unneeded equipment
b. purchase of raw materials-
c. repair of production equipment
d. purchase of a new plant
101. The Fixed Asset System performs all of
the following except
a. determines the need for new assets-
b. maintains depreciation records
c. records retirement and disposal of assets
d. tracks the physical location of fixed assets
102. The payroll department performs all of
the following except
a. prepares paychecks
b. transfers adequate funds to the payroll
imprest account-
c. updates employee payroll records
d. prepares the payroll register
103. Depreciation
a. assures that assets are reported at fair
market value
b. is discretionary for many firms
c. allocates the cost of an asset over its useful
life-
d. is the responsibility of the department using
the asset
104. The Fixed Asset System is similar to the
expenditure cycle except
a. fixed asset transactions are non-routine and
require special authorization and controls
b. fixed assets are capitalized, not expensed
c. both a and b-
d. none of the above
105. Asset maintenance involves
a. the recording of periodic depreciation
b. adjusting the asset records to reflect the cost
of physical improvements
c. keeping track of the physical location of the
assets
d. all of the above-
106. The Fixed Asset Systems does all of the
following except
a. records acquisition of assets
b. records improvements to assets
c. estimates the fair market value of assets in
service-
d. records the disposal of assets
107. Asset disposal
a. occurs as soon as an asset is fully depreciated
b. requires no special authorization
c. automatically initiates the purchase of a
replacement asset
d. must follow formal authorization procedures-