Following Are a Number of Potential Misstatements That Might Occur

question 58

Essay

Following are a number of potential misstatements that might occur in the personnel services cycle. Also listed are a number of necessary controls for this cycle.
REQUIRED: For each potential misstatement, indicate, using the assigned letter, the necessary control that would most likely prevent or detect the misstatement.

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Definitions:

Amortization

The systematic reduction of the value of an intangible asset over its useful life to reflect its declining value or the allocation of the cost of an intangible asset over a period of time.

Intangible Capital Asset

Non-physical assets, such as patents, copyrights, trademarks, and goodwill, that have value due to the rights or advantages they bring to a business.

Consolidated Financial Statement

A comprehensive financial report that combines the financial results of a parent company and its subsidiaries, presenting it as a single economic entity.

Fair Value Increment

The increase in the fair value of an asset over its previous book value, often recognized in the course of business combinations or revaluations.