An Auditor Would Consider Internal Control Over an Entity's Payroll

question 61

Multiple Choice

An auditor would consider internal control over an entity's payroll procedures to be ineffective if the payroll department supervisor is responsible for

• A) Hiring subordinate payroll department employees.
• B) Having custody over unclaimed paychecks.
• C) Updating employee earnings records.
• D) Applying pay rates to time tickets.

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Definitions:

Total Variable Cost

Total Variable Cost is the sum of all costs that vary with the level of production or output, including materials, labor, and other expenses that change in proportion to activity.

Fixed Cost

Fixed cost refers to expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.

Marginal Cost

The additional expenditure required to produce one more unit of a product or service.

Output

The amount of goods or services produced by a firm, industry, or economy within a particular time period.