Question

Which of the following control plans transfers the exact amount of funds necessary to cover payroll checks and related expenses?

(A) use payroll clearing account
(B) approve attendance time data and job time data
(C) independent paycheck distribution
(D) distribute labor costs

Answer 1

A payroll clearing account is used to transfer the exact amount needed for payroll, ensuring that only the necessary funds are used for disbursements.

Step-by-step explanation:

The control plan that transfers the exact amount of funds necessary to cover payroll checks and related expenses is (A) use a payroll clearing account. This method involves setting up a separate bank account that is solely used for payroll. Funds are transferred into this account in the exact amount needed for the payroll disbursement. Once the payroll checks are issued or direct deposits are made, the account should have a zero balance, ensuring that only the necessary funds are transferred and used.