To Test the Transaction Assertion of Occurrence in the Area

question 86

Multiple Choice

To test the transaction assertion of occurrence in the area of payroll, the auditor most likely would

• A)select a sample of personnel files and trace the pay rate to union contracts or other rate rights and obligations.
• B)select a sample of personnel files and trace the pay rate to payroll department files used in payroll preparation.
• C)select a sample of payroll register entries and recalculate gross pay, deductions, and net pay.
• D)select a sample of payroll register entries and vouch hours worked to clock time cards.

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Definitions:

Salvage Value

The projected value of an asset when it reaches the end of its operational lifespan.

Useful Life

The estimated time period an asset is expected to be used by a company before it is no longer useful or becomes obsolete.

Double-Entry System

An accounting system where each transaction is entered twice, as a debit in one account and a credit in another, to ensure the accounting equation is always balanced.

Financial Statements

Papers that deliver a summary of a company's financial health, featuring the income statement, balance sheet, and cash flow statement.