Ais Quiz 5

AIS QUIZ 5
Job Tickets are used by cost accounting to allocate direct labor charges to
work in process.
True
False
The purchasing department authorizes changes in employee pay rates.
True
False
Most payroll systems for mid-size firms use real-time data processing.
True
False
To improve internal control, paychecks should be distributed by a paymaster
True
False
Employee paychecks should be drawn against a the general savings account
of the company.
True
False
Because a time clock is used, supervision is still required when employees
enter and leave the work place.
True
False
Inventory control performs the formal record keeping function for fixed assets.
True
False
The depreciation schedule shows when assets are partially depreciated.
True
False
Authorization to dispose of fixed assets should be issued by the appropriate
level of management
True
False
Work-in-process records are updated by payroll personnel.
True
False
The document that captures the total amount of time that individual workers
spend on each production job is called a
a. job ticket
b. time card
c. personnel action form
d. labor distribution form
An important reconciliation in the payroll system is
a. personnel compares the number of employees authorized to receive a paycheck

to the number of paychecks prepared
b. production compares the number of hours reported on job tickets to the number
of hours reported on time cards
c. payroll compares the labor distribution summary to the hours reported on time
cards
d. general ledger compares the labor distribution summary from cost accounting to
the disbursement voucher from accounts payable
Which internal control is not an important part of the payroll system?
a. Supervisors verify the accuracy of employee time cards.

b. Accounts payable verifies the accuracy of the payroll register before transferring
payroll funds to the general checking accounting.
c. Paychecks are distributed by an independent paymaster.
d. General ledger reconciles the labor distribution summary and the payroll
disbursement voucher.
Which transaction is not processed in the Fixed Asset System?
a. purchase of building
b. improvement of equipment
c. sale of company van
d. purchase of raw materials
Depreciation
a. is calculated by the department that uses the fixed asset

b. is recorded weekly
c. results in book value approximating fair market value
d. allocates the cost of the asset over its useful life
Depreciation records include all of the following information about fixed assets
except
a. the cost of the asset

b. the depreciation method being used
c. the economic benefit of purchasing the asset
d. the location of the asset
Which control is not a part of the Fixed Asset System?
a. development of an economic order quantity model

b. formal analysis of the purchase request
c. review of the assumptions used in the capital budgeting model
d. estimates of anticipated cost savings
Objectives of the Fixed Asset System do not include
a. authorizing the acquisition of fixed assets

b. recording depreciation expense
c. maintaining a record of the fair market value of all fixed assets
d. computing gain and/or loss on disposal of fixed assets
Which of the following is not a characteristic of the Fixed Asset System?
a. Retirements are reported on an authorized disposal report form.

b. Acquisition cost is allocated over the expected life of the asset.
c. Transfer of fixed assets among departments is recorded in the fixed asset
subsidiary ledger.
d. Acquisitions are routine transactions requiring general authorization.
In the payroll subsystem, which function should distribute paychecks?
a. personnel
b. paymaster
c. timekeeping
d. payroll
Where does the responsibility lie for reconciling the labor distribution summary
and the payroll disbursement voucher?
a. general ledger
b. cash disbursements
c. cost accounting
d. personnel
Which of the following statements is not true?
a. Routine payroll processing begins with the submission of time cards.

b. Payroll reconciles personnel action forms with time cards and prepares
paychecks.
c. Cash disbursements signs paychecks and forwards them to the paymaster for
distribution.
d. Payroll clerks must verify the hours reported on the time cards.
In a manufacturing firm, employees use time cards and job tickets. Which of
the following statements is not correct?
a. Paychecks should be prepared from the job tickets.

b. 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.
c. An individual employee will have only one time card.
d. The time reported on job tickets should reconcile with the time reported on time
cards.
Which department is responsible for approving changes in pay rates for
employees?
a. payroll
b. treasurer
c. cash disbursements
d. personnel
Which of the following situations represents a serious control weakness?
a. Paychecks are distributed by the employees immediate supervisor.

b. Timekeeping is independent of the payroll department.
c. Time cards are reconciled with job tickets.
d. Personnel is responsible for updating employee records, including creation of
records for new hires.
Why would an organization require the paymaster to deliver all unclaimed
paychecks to the internal audit department?
a. to prevent an absent employee’s check from being lost

b. to avoid paying absent employees for payday
c. to detect a “phantom employee” for whom a check was produced
d. to prevent the paymaster from cashing unclaimed checks
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. Depreciation policies are in writing.
d. Fully depreciated assets are immediately disposed of.
Cost accounting updates work-in-process accounts from
a. job tickets
b. time cards
c. the labor distribution summary
d. personnel action forms
Payroll uses time card data to do all of the following except
a. prepare the payroll register

b. prepare the labor distribution summary
c. update employee payroll records
d. prepare paychecks
Payroll checks are typically drawn on
a. the regular checking account

b. a wages payable account
c. petty cash
d. a payroll imprest account

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AIS QUIZ 5

a. personnel compares the number of employees authorized to receive a paycheck

a. Supervisors verify the accuracy of employee time cards.

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

a. the cost of the asset

a. development of an economic order quantity model

a. authorizing the acquisition of fixed assets

a. Retirements are reported on an authorized disposal report form.

a. Routine payroll processing begins with the submission of time cards.

a. Paychecks should be prepared from the job tickets.

a. Paychecks are distributed by the employees immediate supervisor.

a. to prevent an absent employee’s check from being lost

a. Proper authorization is required for acquisition and disposal of fixed assets.

a. prepare the payroll register

a. the regular checking account

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