Which of the Following Is a Major Control Risk in the Payroll

question 41

Multiple Choice

Which of the following is a major control risk in the payroll area?

• A) Theft of inventory by staff
• B) Fictitious persons cashing paychecks
• C) Expenses being recorded as assets in order to manipulate earnings
• D) Contracts being awarded to relatives of employees

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Definitions:

Fixed Cost

Costs that do not change with the level of output or sales, such as rent or salaries.

Variable Cost

Expenses that change in proportion to the amount of goods or services produced, like labor and materials.

Diseconomies of Scale

occur when a company or production process becomes less efficient as it scales up, leading to increased average costs per unit.

Minimum Efficient Scale

The smallest level of production at which a firm can achieve the lowest long-term average cost, allowing it to be competitively viable.