Which One of the Following Would NOT Justify an Auditor's

question 112

Multiple Choice

Which one of the following would NOT justify an auditor's decision to spend very little time performing tests of transactions in the payroll and personnel cycle?

• A) Employees will detect any underpayments.
• B) The new payroll bookkeeper has a much better educational background than the former one.
• C) Payroll transactions are extensively audited by government agencies.
• D) Payroll transactions are uniform and uncomplicated.

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Definitions:

Normal Balance

The side (debit or credit) of an account that increases its balance, reflecting the account's role in the accounting equation.

Financial Statement

A formal record of the financial activities and position of a business, individual, or other entity, detailing assets, liabilities, revenue, and expenses over a specific period.

Permanent/Temporary

Used to classify accounts, with permanent accounts being those that carry their balances over into the next fiscal year, and temporary accounts being closed at the end of the fiscal year.

Normal Balance

The typical or usual balance of an account, which can be a debit for asset and expense accounts, or a credit for liability, equity, and revenue accounts.