A Weak Internal Control System Allows a Department Supervisor to "Clock

question 107

Multiple Choice

A weak internal control system allows a department supervisor to "clock in" for a fictitious employee and then approve the employee's time card at the end of the pay period. This fraud would be detected if other controls were in place, such as having an independent party

• A) distribute paychecks.
• B) recompute hours worked from time cards.
• C) foot the payroll journal and trace postings to the general ledger and the payroll master file.
• D) compare the date of the recorded check in the payroll journal with the date on the canceled checks and time cards.

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Definitions:

Sales Discounts

Reductions in the price of goods or services offered by a seller to a buyer to encourage prompt payment.

Sales Returns

Refers to goods that are returned by the customer to the seller after the sale, often due to defects or dissatisfaction.

Operating Expenses

The costs associated with running a business's day-to-day operations, excluding the cost of goods sold.

Periodic Inventory System

An accounting method that records inventory purchase or sale transactions at the end of an accounting period.