Which of the Following Procedures Would Be Most Useful in Determining

question 53

Multiple Choice

Which of the following procedures would be most useful in determining the effectiveness of a company's internal controls regarding the existence or occurrence of payroll transactions?

• A)Observe the segregation of duties concerning personnel responsibilities and payroll disbursement
• B)Inspect evidence of accounting for prenumbered payroll checks
• C)Recompute the payroll deductions for employee fringe benefits
• D)Verify the preparation of the monthly payroll account bank reconciliation

---

Definitions:

Dividend

A portion of a company's earnings distributed to shareholders, usually in the form of cash or additional stock.

Constant Growth

A model assuming that dividends or any other type of cash flow grow at a constant rate indefinitely.

Debt/Equity Ratio

A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity.

Weighted Average Cost Of Capital

The average rate that a company is expected to pay to finance its assets, weighted according to the proportion of equity and debt in its capital structure.