TRUE or FALSE

1. The fixed asset process involves at least three key stages in the asset’s life—
acquisition, continuance, and disposal.
2. Fixed assets are assets that are not necessarily required for the operation of the
business.
3. Fixed Asset Disposal is when an asset becomes old, outdated, inefficient, or
damaged, the company should dispose of it and adjust its records accordingly.
4. Fixed asset disposals do not involve the flow of assets out of the company.
5. Fixed assets continuance phase refers to the processes required to maintain
accurate and up‐to‐date records regarding all fixed assets throughout their useful
lives.
6. Ghost Employee is an entity who receives paychecks, but does actually work for
the company.
7. Many companies have certain conditions under which they pay their employees
for absences due to illness, disability, personal hardships, or vacations.
8. Honest employees may take advantage of these policies in order to receive
excess paid leave.
9. Dishonest employees may take advantage of these policies in order to receive
excess paid leave.
10. Ghost Employees can survive if there is segregation of duties within the
company.

MULTIPLE CHOICE:
1. The purchase of fixed assets is likely to require different authorization processes
than the purchase of inventory. Which of the following is not likely to be part of
the authorization of fixed assets?
a. Specific authorization
b. Inclusion in the capital budget
c. An investment analysis or feasibility analysis of the purchase
d. Approval of the depreciation schedule

2. Which of the following is not a part of “adequate documents and records” for
fixed assets?
a. Fixed asset journal
b. Fixed asset subsidiary ledger
c. Purchase order
d. Fixed asset tags
3. Which of the following questions would be least likely to appear on an internal
control questionnaire regarding the initiation and execution of new property,
plant, and equipment purchases?

a. Are requests for repairs approved by someone higher than the department
initiating the request?
b. Are prenumbered purchase orders used and accounted for?
c. Are purchase requisitions reviewed for consideration of soliciting
competitive bids?
d. Is access to the assets restricted and monitored?

4. Which of the following reviews would be most likely to indicate that a company’s
property, plant, and equipment accounts are not understated?

a. Review of the company’s repairs and maintenance expense accounts

b. Review of supporting documentation for recent equipment purchases
c. Review and recomputation of the company’s depreciation expense
accounts
d. Review of the company’s miscellaneous revenue account.

5. Which of the following is not an advantage of fixed asset software systems when
compared with spreadsheets?
a. Better ability to handle nonfinancial data such as asset location
b. Easier to apply different depreciation policies to different assets
c. Manual processes to link to the general ledger
d. Expanded opportunities for customized reporting.

6. It is the financial plan detailing all of the company’s investments in fixed assets
and other investments.
a. Capital Budget
b. Fixed Asset Subsidiary Ledger
c. Captal Budget
d. Fixed Asset Subsidary Ledger

7. What Fixed Asset Control is about the requirement for specific approval for
acquisitions of large‐dollar items for inclusion in the capital budget.

a. Segregation of Duties
b. Adequate Records and Documents
c. Authorization of Transactions
 d. Independent Checks and Reconciliation

8. What Fixed Asset Control is about performing physical counts of fixed assets
and reconciling with the fixed asset subsidiary ledger.

a. Segregation of Duties
b. Adequate Records and Documents
c. Authorization of Transactions
d. Independent Checks and Reconciliation

9. What Fixed Asset Control is about the IT controls over computer records and
physical controls in records storage area.
a. Security of Assets and Documents
b. Adequate Records and Documents
c. Authorization of Transactions
d. Independent Checks and Reconciliation

10. It is the record detailing the amounts and timing of depreciation for all fixed asset
categories except land and any construction‐in‐progress accounts
a. Depreciation Schedule
b. Fixed Asset Subsidiary Ledger
c. Capital Budget
d. Fixed Asset Journal

11. Which of the following statements about payroll and fixed asset processes is
true?
a. Both have only routine processes.
b. Both have only non routine processes.
c. Both have routine and nonroutine processes.
d. Payroll has only routine processes, while fixed assets have only non routine
processes.
12. For a given pay period, the complete listing of paychecks for the pay period is
a. payroll register
b. payroll ledger
c. payroll journal
d. paymaster
13. A payroll voucher
a. authorizes an employee paycheck to be written
b. authorizes the transfer of cash from a main operating account to a payroll
account
 c. authorizes the transfer of cash from a payroll account to a main operating
account
d. authorizes the paymaster to distribute paychecks
14. For proper segregation of duties, the department that should authorize new
employees for payroll would be
a. payroll
b. human resources
c. cash disbursement
d. general ledger

15. Which of the following is not an independent check within payroll processes?
a.Time shes are reconcile with production records
b. Time sheets are reconciled with the payroll register.
c. Paychecks are prepared on prenumbered checks.

16. 6. An integrated IT system payroll and human resources may have higher risk
above those of manual processes. Passwords and access logs should be used
to lessen risk?
a. hardware failures
b. erroneous data input
c. payroll data that does not reconcile to time cards
d. unauthorized access to payroll data

17. 7. Which of the following procedures would be most useful in determining the
effectiveness of a company internal control regarding the existence of payroll
transactions payroll transactions
a. Observe the segregation of duties concerning personnel responsibilities
and payroll disbursement.
b. Inspect evidence of accounting for prenumbered checks
c. Observe if internal audit is successful
d. understand the ISO

18. Payroll fraud are a form of theft

a. True
b. False
c. Treu
d. Fast

19. The payroll system is the target of several types of fraud schemes.
a. True
 b. False
c. True
d. Fast

20. With good corporate governance, time sheets could be more easily altered,
payroll funds can be readily stolen, and fixed assets are more likely to be
misused or stolen.
a. False
b. True
c. False
d. True