 |
| 1 | |
Which of the following is a purpose of an internal control system? |
| | A) | Protect assets |
| | B) | Ensure reliable accounting |
| | C) | Promote efficient operations |
| | D) | Urge adherence to company policies |
| | E) | All of the above |
|
|
|
| 2 | |
If two sales clerks share the same cash register, which principle of internal control has been compromised (or violated)? |
| | A) | Establishing responsibilities |
| | B) | Separate recordkeeping from custody of assets |
| | C) | Maintain adequate records |
| | D) | All of the above |
| | E) | None of the above |
|
|
|
| 3 | |
Management's ability to monitor and control business operations is greatly improved with a fully automated accounting system because of which of the following? |
| | A) | Separation of duties does not have to be maintained. |
| | B) | More hard evidence in the form of written forms and documents are used. |
| | C) | Less testing of records is possible. |
| | D) | Data entry errors are always discovered in the early stages. |
| | E) | Technology allows quicker access to databases and information. |
|
|
|
| 4 | |
Which of the following is an example of internal controls that could be put in place to help safeguard the risk of loss due to increased e-commerce transactions? |
| | A) | Firewalls |
| | B) | Encryption |
| | C) | Exploitation |
| | D) | A and B above |
| | E) | None of the above |
|
|
|
| 5 | |
Which of the following would be a benefit of having employees bonded? |
| | A) | Bonding reduces the risk of loss. |
| | B) | Bonding discourages theft. |
| | C) | The bonding company is unlikely to be sympathetic with an employee involved in theft. |
| | D) | All of the above. |
| | E) | None of the above. |
|
|
|
| 6 | |
The Committee of Sponsoring Organizations (COSO) organizes control components into: |
| | A) | Control Activities and Control Environment. |
| | B) | Monitoring and Risk Assessment. |
| | C) | Communication. |
| | D) | All of the above. |
| | E) | None of the above. |
|
|
|
| 7 | |
In the December 31 financial statements, the following balances were reported: Cash $40,000, Accounts Payable $12,000, Accounts Receivable $17,000, and Net Sales $160,000. What is the amount of days' sales uncollected? |
| | A) | 3.87 days |
| | B) | 38.78 days |
| | C) | 9.28 days |
| | D) | 126.41 days |
| | E) | None of the above |
|
|
|
| 8 | |
At the end of the day, the cashier: (1) counts the money in the cash drawer, (2) compares the cash count with the recorded cash sales for the day, and (3) makes notations of differences (that is, cash overages or shortages) on a special report that is forwarded, along with the cash, to the accounting department. How should this procedure be described? |
| | A) | It is an acceptable procedure, adhering to internal control principles. |
| | B) | The procedure is designed to provide adequate internal control over cash. |
| | C) | It is an unacceptable procedure, not following internal control principles. |
| | D) | The procedure follows the broad principle of internal control of insuring assets. |
| | E) | None of the above. |
|
|
|
| 9 | |
Which of the following would require the Petty Cash account to be debited? |
| | A) | The Petty cash fund is short by $3.50. |
| | B) | The Petty cash fund is over by $4.50. |
| | C) | The Petty Cash account is being decreased. |
| | D) | The Petty Cash account is being created. |
| | E) | None of the above. |
|
|
|
| 10 | |
Which of the following would be an appropriate use for petty cash? |
| | A) | Postage |
| | B) | Purchase of a computer |
| | C) | Loan to an employee |
| | D) | Advance on a payroll check |
| | E) | All of the above |
|
|
|
| 11 | |
The company's accountant recorded a bank deposit at $460, but the bank recorded the deposit at its correct amount of $640. (The accountant made the error.) How should this error be treated on the bank reconciliation? |
| | A) | Addition to the book balance |
| | B) | Deduction from the book balance |
| | C) | Addition to the bank statement balance |
| | D) | Deduction from the bank statement balance |
| | E) | None of the above |
|
|
|
| 12 | |
How should a deposit in transit be treated on a bank reconciliation? |
| | A) | Addition to the book balance |
| | B) | Deduction from the book balance |
| | C) | Addition to the bank statement balance |
| | D) | Deduction from the bank statement balance |
| | E) | None of the above |
|
|
|
| 13 | |
The bank debited the company's bank account for a check printing fee. How should this item be treated on the bank reconciliation? |
| | A) | Addition to the book balance |
| | B) | Deduction from the book balance |
| | C) | Addition to the bank statement balance |
| | D) | Deduction from the bank statement balance |
| | E) | None of the above |
|
|
|
| 14 | |
What is the proper journal entry to adjust the cash account for a check marked as NSF that has been returned by the bank? |
| | A) | Debit Cash; Credit Accounts Receivable |
| | B) | Debit Bad Debt Expense; Credit Cash |
| | C) | Debit Accounts Receivable; Credit Cash |
| | D) | Debit Accounts Payable; Credit Cash |
| | E) | Debit Miscellaneous Expense; Credit Cash |
|
|
|
| 15 | |
Internal controls are crucial to companies that convert from U.S. GAAP to IFRS. Which of the following are risks to this process? |
| | A) | Misstatement of financial information. |
| | B) | Fraud. |
| | C) | Ineffective communication of the impact of this change for investors, creditors and other users of the financial information. |
| | D) | All of the above. |
| | E) | None of the above. |
|
|
.