The Multiple Choice Questions Blog

At Alex Manufacturing Ltd, potential employees are interviewed by the production manager, Arthur, who then forwards successful candidates’ details, the job title and the rate of pay to the company’s personnel manager, Karen,  for an employment offer to be made.

Which ONE of the following controls could be most effective at ensuring that wages are paid accurately?

Select ONE answer:

1. Payments should be authorised by a director before being submitted for processing
2. Employees should NOT be interviewed by the production manager, Arthur, and another responsible personnel official, i.e. Karen
3. Hours paid should be reconciled to timesheets
4. Reconciliations should be performed between the payroll and the company’s cash records

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 – The key problem here is a lack of segregation of duties: Arthur, the production manager may be tempted to introduce non-existent employees into the system, leading to the misappropriation of company funds by way of wages payments for non-existent employees. Controls to curb this would therefore seek to verify that the employees being paid do in fact exist and have done work for the company. Authorisation by a director would not help because the director would not know whether the employees were legitimate. Reconciliation of payroll to cash records would not control the amounts included on the payroll in the first place.
4. Not correct

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

At Alex Manufacturing Ltd, potential employees are interviewed by the production manager, Arthur, who then forwards successful candidates’ details, the job title and the rate of pay to the company’s personnel manager, Karen,  for an employment offer to be made.

Which ONE of the following controls could be most effective at ensuring that wages are paid accurately?

Select ONE answer:

1. Payments should be authorised by a director before being submitted for processing
2. Employees should be interviewed by the production manager, Arthur, and another responsible personnel official, i.e. Karen
3. Hours paid should NOT be reconciled to timesheets
4. Reconciliations should be performed between the payroll and the company’s cash records

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 – The key problem here is a lack of segregation of duties: Arthur, the production manager may be tempted to introduce non-existent employees into the system, leading to the misappropriation of company funds by way of wages payments for non-existent employees. Controls to curb this would therefore seek to verify that the employees being paid do in fact exist and have done work for the company. Authorisation by a director would not help because the director would not know whether the employees were legitimate. Reconciliation of payroll to cash records would not control the amounts included on the payroll in the first place.
3. Not correct
4. Not correct

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

A deficiency has been identified in the following area of the company’s wages system as outlined below.

For the stated deficiency, select the risk which is MOST likely to arise.

• Regular reconciliations of the wages and salaries control account are not performed.

Select ONE answer:

1. Payments might be made incorrectly
2. Pay might not be recorded correctly in the general ledger
3. The company may pay employees who have left
4. The various elements of pay might not be calculated correctly

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 – The deficiency arises after the calculation of the payroll, so although it might expose errors in that calculation it is more likely to expose errors in the amount paid/general ledger.
2. Not correct
3. Not correct
4. Not correct

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

A deficiency has been identified in the following area of the company’s wages system, as outlined below.

For the stated deficiency, select the risk which is MOST likely to arise.

• Regular reconciliations of the payroll to timesheets are not performed.

Select ONE answer:

1. Pay might not be recorded correctly in the general ledger
2. Payments might be made incorrectly
3. The company may pay employees who have left
4. The various elements of pay might not be calculated correctly

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 – The deficiency arises when calculating pay (i.e., ensuring that the amounts on the payroll reflect the amount recorded on the timesheets), so would not directly affect the general ledger.

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

A deficiency has been identified in the following area of the company’s wages system, as outlined below.

For the stated deficiency, select the risk which is MOST likely to arise.

-Details of wages are not regularly checked in the personnel file.

Select ONE answer:

1. Pay might not be recorded correctly in the general ledger
2. Payments might be made incorrectly
3. The company may pay employees who have left
4. The various elements of pay might not be calculated correctly

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 – The deficiency arises when calculating wages and salaries: a failure to check wages to the personnel file could result in an employee who has left (which would be recorded on the file) being included on the payroll. The recording of pay in the general ledger would not be directly affected by this.
4. Not correct

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