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:

Indirect Method

A technique for creating a statement of cash flows where net income is adjusted for non-cash transactions and changes in working capital.

Operating Activities

Operating activities refer to the day-to-day actions a business engages in that are directly related to its primary business purpose, including production, sales, and delivery of services.

Prepaid Expenses

Costs paid in advance for goods or services, which are recognized as an asset until the actual goods or services are received.

Accounts Receivable

Money owed to a company by its customers for products or services delivered but not yet paid for.