When the Employees Are Paid Automatically by Bank Deposits to the Employees

question 2

Multiple Choice

When the employees are paid automatically by bank deposits to the employees' accounts,in an effort to identify potential fraud,the auditor can look for

• A)duplicated bank account numbers.
• B)duplicated names in the master payroll files.
• C)unusual employee names.
• D)cancelled cheques.

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Definitions:

Equity

The value of ownership interest in a firm, calculated as the difference between assets and liabilities on a company’s balance sheet.

Dividends

Payments made by a corporation to its shareholders, often derived from profits, on a per-share basis.

Return on Assets

A financial ratio that measures the net income produced by total assets during a period by comparing net income to the average total assets.

Net Income

The net earnings of a company following the deduction of all costs, such as taxes and operational expenses, from its overall income.