Day: March 1, 2026

Which ONE of the following features in the payroll system of Alex Manufacturing Ltd could result in the employee costs figure in the financial statements being MISSTATED?

Select ONE answer:

1. Rates of pay are negotiated at a local level; there is no central control
2. The payroll clerk cannot amend standing data on the payroll system without the written authorisation of a senior member of staff
3. Personnel records are NOT kept up to date
4. The payroll department receives confirmation of new employees in writing

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 – Personnel records contain details of pay rates. If these are not kept up to date standing data in the payroll system may also be invalid. Options 1,2 and 4 would not lead to misstatement in the financial statements
4. Not correct

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