Page 318 - Accounting Information Systems

CHAPTE R 6 The Expenditure Cycle Part II: Payroll Processing and Fixed Asset Procedures 289

Key Terms

asset acquisition (281) job tickets (266)
asset disposal (283) labor distribution summary (266)
asset maintenance (283) labor usage file (279)
attendance file (279) paychecks (269)
depreciation schedule (283) payroll imprest account (269)
employee file (279) payroll register (269)
employee payroll records (266) personnel action forms (266)
fixed assets (281) time cards (266)
human resource management (HRM) system (279)

Review Questions

1. Which document is used by cost accounting to 11. What are the objectives of a fixed asset system?
allocate direct labor charges to work-in-process? 12. How do fixed asset systems differ from purchases
2. Which department authorizes changes in em- systems?
ployee pay rates? 13. What are three tasks of the fixed asset system?
3. Why should the employee’s supervisor not distrib- 14. What information is found on the depreciation
ute paychecks? schedule? How can this information be verified?
4. Why should employee paychecks be drawn against 15. Why is it crucial to the integrity of the financial
a special checking account? statements that the fixed asset department be
5. Why should employees clocking on and off the job informed of asset improvements and disposals?
be supervised? 16. What is the auditor’s role with respect to the
6. What is a personnel action form? fixed asset system?
7. What tasks does a payroll clerk perform upon 17. Which department performs the formal record-
receipt of hours-worked data from the production keeping function for fixed assets?
department? 18. What document shows when fixed assets are fully
8. What documents are included in the audit trail for depreciated?
payroll? 19. Who should authorize disposal of fixed assets?
9. What are the strengths and weaknesses of a batch 20. Assets used for production are secured in a ware-
process with sequential files? house. Who has custody of fixed assets?
10. What are the strengths and weaknesses of a batch
system with direct access files?

Discussion Questions

1. What is the importance of the job ticket? Illustrate system with real-time data input over a basic batch
the flow of this document and its information from system?
inception to impact on the financial statements. 4. Discuss the major control implications of batch
2. Are any time lags in recording economic events systems with real-time data input. What compen-
typically experienced in payroll systems? If so, what sating procedures are available?
are they? Discuss the accounting profession’s view 5. Discuss some specific examples in which informa-
on this matter as it pertains to financial reporting. tion systems can reduce time lags and how the
3. What advantages are achieved in choosing a basic firm is positively affected by such time lags.
batch computer system over a manual system? 6. Discuss some service industries that may require
What advantages are achieved in choosing a batch their workers to use job tickets.