Which of the Following Is an Effective Internal Control Used

question 35

Multiple Choice

Which of the following is an effective internal control used to prove that production department employees are properly validating payroll timecards at a time-recording station?

• A) Timecards should be carefully inspected by those persons who distribute pay envelopes to the employees.
• B) One person should be responsible for maintaining records of employee time for which salary payment is not to be made.
• C) Daily reports showing time charged to jobs should be approved by the foreman and compared to the total hours worked on the employee timecards.
• D) Internal auditors should make observations of distribution of paychecks on a surprise basis.

---

Definitions:

Gross Accounts Receivable

The total amount owed to a company by its customers for goods or services delivered on credit before any deductions for returns or bad debts.

Bad Debts Expense

The cost associated with accounts receivable that are not expected to be collected.

Contra Asset

An asset account where its balance is opposite of the normal balance, used to offset the balance of a related account, such as allowance for doubtful accounts offsetting accounts receivable.

Expense

An outflow of money to another person or company to pay for an item or service, or for a cost required to operate a business.