When Examining Payroll Transactions, an Auditor Is Primarily Concerned with the Possibility

question 128

Multiple Choice

When examining payroll transactions, an auditor is primarily concerned with the possibility of

• A) incorrect summaries of employee time records.
• B) overpayments and unauthorized payments.
• C) under withholding of amounts required to be withheld.
• D) posting of gross payroll amounts to incorrect salary expense accounts.

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Definitions:

Unit Variable Costs

The costs that vary directly with the level of production or sales volume, such as materials and labor, calculated on a per-unit basis.

Break-even Sales

The amount of revenue from sales needed to cover all of a company’s operating expenses, resulting in neither profit nor loss.

Unit Variable Costs

The costs that vary directly with the production volume, including materials and labor, on a per unit basis.

Break-even Point

The point at which total revenues equal total costs, resulting in no profit or loss.