AIS Key Terms - Chpt 10.txt

  1. payroll process
    the policies and procedures that employees follow in acquiring and maintaining human resources, capturing and maintaining employee data, paying employees for their time worked, and recording the related cash and payroll liabilities and expenses.
  2. fixed asset process
    the policies and procedures involved in purchasing property; capturing and maintaining relevant data about the assets; paying for and recording the related assets; recording depreciation and other expenses; and accounting for gains or losses.
  3. payroll register
    a complete listing of salary or wage detail for all employees for a given time.
  4. what is the function of a payroll voucher?
    a payroll voucher authorizes the transfer of cash from the company's main operating account into the payroll cash account.
  5. payroll disbursement journal
    prepared to provide a listing of all paychecks written, in check-number sequence, with the total supporting the amount of payroll funds transferred to the payroll bank account.
  6. what is a paymaster? what should a paymaster's responsibilities not include?
    A paymaster is the person who distributes paychecks. A paymaster's responsibilities should not include any of the related payroll accounting functions or custody of cash
  7. name some payroll reconciliation procedures that should be performed regularly
    the number of hours reported on time sheets and the time sheets should be reconciled with production reports; payroll register should be reconciled to the general ledger on a regular basis; someone separate from the payroll processing function should reconcile the bank statement for the payroll cash account on a monthly basis.
  8. what type of processing is well suited for payroll activities?
    batch processing
  9. why has payroll outsourcing become prevalent?
    because it offers increased convenience, confidentiality, and protection from the risk of liability for failure to submit tax withholdings and the related reports.
  10. for many companies, what is the largest investment reported on the balance sheet?
    fixed assets
  11. capital budget
    a financial plan detailing all of the company's investments in fixed assets and other investments.
  12. fixed asset subsidiary ledger
    a detailed listing of the company's fixed assets, divided into categories consistent with the general ledger accounts.
  13. fixed assets continuance
    updating cost data for asset improvement; updating estimated figures as needed; adjusting for periodic depreciation; keeping track of the physical location of assets.
  14. what is the most important part of the asset continuation phase?
    the periodic depreciation schedule
  15. depreciation schedule
    the record detailing the amounts and timing of depreciation for all fixed asset categories except land.
  16. what is accumulated depreciation used to determine?
    the book value of an asset at any point in its life.
  17. disposing of an asset may include:
    selling or exchanging it; discarding it; or donating it to another party who may be able to use it.
  18. what four basic steps in accounting for the disposal of fixed assets must be carried out by the fixed asset accountant?
    record the date of disposal; remove disposed assets from the fixed asset subsidiary ledger; remove depreciation accounts related to disposed assets; and compute gains or losses resulting from the disposal.
  19. the process for purchasing fixed assets should include what three formal steps?
    investment analysis; comparison with capital budget; and a review of the proposal and specific approval by the appropriate level of management.
  20. a formal investment analysis should include what two things?
    financial justification and a written narrative of the benefits.
  21. what are some shortcomings of spreadsheet-based systems?
    the design of spreadsheets is very time consuming; spreadsheets are not flexible enough to accommodate changes efficiently; it is difficult to apply varying depreciation policies; not well-suited for handling nonfinancial data; difficult to establish an audit trail through spreadsheets; manual processes are typically required to link the spreadsheets with the general ledger and other accounting programs; limited opportunities to customize reporting.
  22. what is the most common means of defrauding a company?
    dishonest employees falsifying time sheets.
  23. ghost employee
    an entity who receives a paycheck, but who does not actually work for the company. Normally initiated by someone within the company's payroll function.
  24. in order to successfully pull off a ghost employee, what two functions need to be under the fraudster's control?
    the payroll preparation function and the paycheck disbursement activities.
  25. what are some clues of a ghost employee?
    the payroll register identifies paychecks without adequate tax withholdings; personnel files contain duplicate personally identifying information; payroll expenses are over budget; paychecks are not claimed; paychecks returned with the bank statement contain dual endorsements.
  26. do payroll funds and fixed assets belong to the managers of an organization?
    no, they are stewards of those assets.
Card Set
AIS Key Terms - Chpt 10.txt
AIS Key Terms - Chpt 10