Which of the Following Audit Procedures Is Aimed at Determining

question 36

Multiple Choice

Which of the following audit procedures is aimed at determining whether every name on the company payroll is an employee actually on the job?

• A) A surprise observation of a paycheck distribution.
• B) A test of payroll extensions.
• C) Analytical comparisons of budgeted to actual payroll expense.
• D) Comparison of payee names on canceled payroll checks with the payroll register.

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Definitions:

Perpetual Inventory System

An accounting method that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

FIFO Method

An inventory valuation method where the first goods purchased are the first ones to be sold, "First In, First Out".

Days In Inventory

Days in inventory is a financial metric indicating how long it takes for a company to turn its inventory into sales.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period.