The Multiple Choice Questions Blog

Alex Manufacturing Ltd has a computerised payroll system.

All employees are paid by BACS directly into their bank accounts.

Which ONE of the following controls will be MOST effective at ensuring that payment is made to the correct employee?

Select ONE answer:

1. The printout from the bank is agreed to the BACS list, and any discrepancies are investigated
2. Authorisation of overtime worked
3. A sample of calculations performed by the payroll package is manually reperformed each month
4. The BACS list is reviewed by the junior temporary payroll employee together with supporting payroll documentation

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – Options 2 and 3 are not correct as authorisation of overtime ensures that the correct number of hours are paid for and reperformance of payroll calculations ensures the accuracy of the deductions, etc.
2. Not correct
3. Not correct
4. Not correct

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The following describes a process in the payroll system at Alex Manufacturing Ltd.

For the process, select whether the issue represents a strength, a deficiency, has no impact or has no material impact on the system.

• Wages are paid by bank transfer, which is authorised by both the financial controller and the financial director.

Select ONE answer:

1. No impact
2. No material Impact
3. Deficiency
4. Strength

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – Process is also a strength as an authorisation control features.

This work is licensed under a Creative Commons Attribution 4.0 International License.

The following describes a process in the payroll system at Alex Manufacturing Ltd.

For the process, select whether the issue represents a strength, a deficiency, has no impact or has no material impact on the system.

• The payroll is prepared by a payroll clerk from hours worked information on a standard payroll IT package. The payroll is checked against individual records automatically by the system. The payroll is approved by the financial controller.

Select ONE answer:

1. No impact
2. No material Impact
3. Strength
4. Deficiency

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct – Process has elements of performance review and authorisation.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

The following describes a process in the payroll system at Alex Manufacturing Ltd.

For the process, select whether the issue represents a strength, a deficiency, has no impact or has no material impact on the system.

• Employees are given individual security codes to punch into the main door keypad. This keypad also monitors the hours worked by employees, a sample of which is checked against data from headcounts during the day.

Select ONE answer:

1. No impact
2. Strength
3. No material Impact
4. Deficiency

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct – Process involves physical security as a control.
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Alex Manufacturing Ltd employs several trainees who start every six months.

All trainees must complete a six-month probationary period before progressing to the next level of the traineeship.

The external accountant providing assurance on the efficiency of the controls’ operation has identified the following deficiency in Alex Manufacturing Ltd’s payroll system.

For the deficiency stated below, select the most likely consequence which might arise because of that deficiency.

• Many trainee employees work overtime, but there is no system for authorising the levels of overtime claimed.

Select ONE answer:

1. There is a high risk that the trainees will be paid the wrong amounts
2. The computerised payroll may contain miscalculations in the wage rate
3. There is NO impact on the efficiency of the controls
4. The impact on the controls is not material and requires no action

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.