The Most Important Means of Verifying Account Balances in the Payroll

question 22

Multiple Choice

The most important means of verifying account balances in the payroll and personnel cycle are

• A) tests of controls and substantive tests of transactions.
• B) analytical procedures and tests of controls.
• C) analytical procedures and substantive tests of transactions.
• D) tests of controls and tests of details of balances.

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Definitions:

Trading Security

A financial asset that a company holds primarily for the purpose of selling it in the short term to profit from price changes.

Available-For-Sale Security

A financial asset that is neither classified as held-to-maturity nor held for trading, and the investor intends to sell if needed before its maturity or holding period ends.

Perfectly Matched Hedge

A hedging strategy that entirely eliminates the risk of a particular position by taking an offsetting position in the market.

Interest Rate Swap

A financial derivative contract in which two parties agree to exchange future interest rate payments, typically one fixed-rate and one variable-rate.