48.

Which of the following internal control activities could best prevent direct labor from being charged
to manufacturing overhead?
A. Reconciliation of work in process inventory with cost records.
B. Comparison of daily journal entries with the factory labor summary.
C. Comparison of period costs budgets and time cards.
D. Reconciliation of the unfinished job summary and production cost records.

B. Comparison of daily journal entries with the factory labor summary.

49. Which of the following internal control activities most likely would prevent direct labor hours from
being charged to manufacturing overhead?
A. Periodic independent counts of work-in-process for comparison to recorded amounts.
B. Comparison of daily journal entries with approved production orders.
C. Use of time tickets to record actual labor worked on production orders.
D. Reconciliation of work-in-process inventory with periodic cost budgets.

C. Use of time tickets to record actual labor worked on production orders.

50. An auditor most likely would assess control risk at the maximum if the payroll department supervisor
is responsible for
A. Examining authorization forms for new employees.
B. Comparing payroll registers with original batch transmittal data.
C. Authorizing payroll rate changes for all employees.
D. Hiring all subordinate payroll department employees.

C. Authorizing payroll rate changes for all employees.

51. In determining the effectiveness of an entity's policies and procedures relating to the existence or
occurrence assertion for payroll transactions, an auditor most likely would inquire about and
A. Observe the segregation of duties concerning human resource responsibilities and payroll
disbursement.
B. Inspect evidence that all pre-numbered payroll checks are accounted for.
C. Recompute the payroll deductions for employee fringe benefits.
D. Verify the preparation of the monthly payroll account bank reconciliation.

A. Observe the segregation of duties concerning human resource responsibilities and payroll
disbursement.

52. In the substantive audit procedures for payroll where the control risk is set at low, an auditor most
likely would
A. Verify that checks representing unclaimed wages are mailed.
B. Trace individual employee deductions to entity journal entries.
C. Observe entity employees during a payroll distribution.
D. Compare payroll costs with entity standards or budgets.

D. Compare payroll costs with entity standards or budgets.

53. Tracing a sample of time cards before and after period end to the weekly payroll report and tracing
the weekly payroll report to the general ledger to verify that payroll transactions are recorded in the
proper period would provide evidence primarily for which assertion?
A. Classification.
B. Occurrence.
C. Cutoff.
D. Valuation.

C. Cutoff.

54. Comparing amounts selected from the payroll account analysis for payroll accruals to supporting
documentation would provide evidence primarily for which assertion?
A. Completeness.
B. Existence.
C. Classification.
D. Presentation and disclosure.

B. Existence.