Which of the Following Is a Control Risk Related to Payroll

question 153

Multiple Choice

Which of the following is a control risk related to payroll?

• A) theft of inventory by staff
• B) a dishonest employee cashing a paycheck that was written to a fictitious person
• C) expenses being recorded as assets in order to manipulate earnings
• D) contracts being awarded to relatives of employees

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Definitions:

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, detailing revenues, expenses, and profits.

Inventory Value

The total cost or market value of all the goods held by a company intended for sale or used in production.

Prime Costs

The combined costs of direct materials and direct labor that are directly involved in the production of a product.

Factory Overhead

Costs related to the manufacturing process that are not directly attributable to the product being manufactured, such as utilities and maintenance of equipment.