Quizzes
Quizzes
Quizzes
CHAPTER 2
1. Which statement is NOT true?
a. Business activities begin with the acquisition of
materials, property, and labor in exchange for
cash.
b. The conversion cycle includes the task of
determining raw materials requirements.
c. Manufacturing firms have a conversion cycle
but retail firms do not.
d. A payroll check is an example of a product
document of the payroll system.
e. A journal voucher is actually a special source
document.
CHAPTER 3
1. Management can expect various benefits to follow
from implementing a system of strong internal
control. Which of the following benefits is least
likely to occur?
a. reduction of cost of an external audit
b. prevention of employee collusion to commit
fraud
c. availability of reliable data for decision-making
purposes
d. some assurance of compliance with the Foreign
Corrupt Practices Act of 1977
e. some assurance that important documents and
records are protected
CHAPTER 4
1. Which document is NOT prepared by the sales
department?
a. packing slip
b. shipping notice
c. bill of lading
d. stock release
2. For an action to be called fraudulent, all of the following conditions are required except
a.poor judgment
b.false representation
c.intent to deceive
d.injury or loss
3. One characteristic of employee fraud is that the fraud
a.is perpetrated at a level to which internal controls do not apply
b.involves misstating financial statements
c.involves the direct conversion of cash or other assets to the employee’s personal benefit
d.involves misappropriating assets in a series of complex transactions involving third parties
6. Skimming involves
a.stealing cash from an organization before it is recorded
b.Stealing cash from an organization after it has been recorded
c.manufacturing false purchase orders, receiving reports, and invoices
d.A clerk pays a vendor twice for the same products and cashes the reimbursement check issued
by the vendor.
7. Who is responsible for establishing and maintaining the internal control system?
a.the internal auditor
b.the accountant
c.management
d.the external auditor
12. The bank reconciliation uncovered a transposition error in the books. This is an example of a
a.preventive control
b.detective control
c.corrective control
d.none of the above
14. The decision to extend credit beyond the normal credit limit is an example of
a.independent verification
b.authorization
c.segregation of functions
d.supervision
15. When duties cannot be segregated, the most important internal control procedure is
a.supervision
b.independent verification
c.access controls
d.accounting records
16. An accounting system that maintains an adequate audit trail is implementing which internal
control procedure?
a.access controls
b.segregation of functions
c.independent verification
d.accounting records
17. Employee fraud involves three steps. Of the following, which is not involved?
a.concealing the crime to avoid detection
b.stealing something of value
c.misstating financial statements
d.converting the asset to a usable form
19. When certain customers made cash payments to reduce their accounts receivable, the
bookkeeper embezzled the cash and wrote off the accounts as uncollectible. Which control
procedure would most likely prevent this irregularity?
a.segregation of duties
b.accounting records
c.accounting system
d.access controls
21. Internal control system have limitations. These include all of the following except
a.possibility of honest error
bcircumvention
c.management override
d.stability of systems
22. Management can expect various benefits to follow from implementing a system of strong
internal control. Which of the following benefits is least likely to occur?
a.Reduced cost of an external audit.
b.Preventing employee collusion to commit fraud.
c.Availability of reliable data for decision-making purposes.
d.Some assurance of compliance with the Foreign Corrupt Practices Act of 1977.
e.Some assurance that important documents and records are protected.
25. The reconciliation that occurs in the shipping department is intended to ensure that
a.credit has been approved
b.the customer is billed for the exact quantity shipped
c.the goods shipped match the goods ordered
d.inventory records are reduced for the goods shipped
26. The adjustment to accounting records to reflect the decrease in inventory due to a sale occurs
in the
a.warehouse
b.shipping department
c.billing department
d.inventory control department
29. The stock release copy of the sales order is not used to
a.locate and pick the items from the warehouse shelves
b.record any out-of-stock items
c.authorize the warehouse clerk to release custody of the inventory to shipping
d.record the reduction of inventory
30. The billing department is not responsible for
a.updating the inventory subsidiary records
b.recording the sale in the sales journal
c.notifying accounts receivable of the sale
d.sending the invoice to the customer
31. Usually, specific authorization is required for all of the following except
a.sales on account which exceed the credit limit
b.sales of goods at the list price
c.a cash refund for goods returned without a receipt
d.write off of an uncollectible account receivable
32. The accounts receivable clerk destroys all invoices for sales made to members of her family
and does not record the sale in the accounts receivable subsidiary ledger. Which procedure will
not detect this fraud?
a.prenumber and sequence check all invoices
b.reconcile the accounts receivable control to the accounts receivable subsidiary ledger
cprepare monthly customer statements
d.reconcile total sales on account to the debits in the accounts receivable subsidiary ledger
34. Good internal controls in the revenue cycle should ensure all of the following except
a.all sales are profitable
b.all sales are recorded
c.credit is authorized
d.inventory to be shipped is not stolen
35. Which control does not help to ensure that accurate records are kept of customer accounts
and inventory?
a.reconcile accounts receivable control to accounts receivable subsidiary
b.authorize credit
c.segregate custody of inventory from record keeping
d.segregate record keeping duties of general ledger from accounts receivable
36. Internal controls for handling sales returns and allowances do not include
a.computing bad debt expense using the percentage of credit sales
b.verifying that the goods have been returned
c.authorizing the credit memo by management
d.using the original sales invoice to prepare the sales returns slip
40. The revenue cycle utilizes all of the following files except
a.credit memo file
b.sales history file
c.shipping report file
d.cost data reference file
41. All of the following are advantages of real-time processing of sales except
a.The cash cycle is shortened
b.Paper work is reduced
c.Incorrect data entry is difficult to detect
d.Up-to-date information can provide a competitive advantage in the marketplace
43. Which of the following is NOT a common method for achieving multilevel security?
a.Access control list
b.Application integrity
c.Role based access control
d.All of the above
44. The employee entered "40" in the "hours worked per day" field. Which check would detect
this unintentional error?
a.numeric/alphabetic data check
b.sign check
c.limit check
dmissing data check
45. An inventory record indicates that 12 items of a specific product are on hand. A customer
purchased two of the items, but when recording the order, the data entry clerk mistakenly entered
20 items sold. Which check could detect this error?
a.numeric/alphabetic data checks
b.limit check
c.range check
d.reasonableness check
46. Methods used to maintain an audit trail in a computerized environment include all of the
following except
a.transaction logs
b.transaction listings
c.data encryption
d.log of automatic transactions
48. Periodically, the general ledger department receives all of the following except
a.total increases to accounts receivable
b.total of all sales backorders
c.total of all sales
d.total decreases in inventory
50. In balancing the risks and benefits that are part of every ethical decision, managers receive
guidance from each of the following except
a.justice
b.self interest
c.risk minimization
d.proportionality