Exam 11: Other Benefits and Reimbursements

A company that carefully prepares bank reconciliations will be likely to discover if checks were written and mailed, but which had not been recorded in the company's books.

One reason that accounting reports are sometimes misleading is that GAAP sometimes differs from economic reality.

As long as an accountant carefully follows GAAP, financial statements will always accurately portray economic reality.

A bookkeeper using a double entry system can record an increase in cash without indicating whether any other accounts were affected by this increase in cash.

Misstatements only arise at the recognition stage of the accounting process.

A common internal control practice with regard to cash is to require two people to sign any large checks.

Company internal controls are entirely related to financial reporting, and are not related to the effectiveness or efficiency of company operations.

Which of the following is the clearest example of a preventive control?

A company does not realize that an employee is stealing some of its inventory, and therefore its records do not reflect this theft. This misstatement can be said to arise during the

A company that makes significant sales over the internet has customers enter their addresses on screens that have drop-down menus for certain items, such as the name of the state and the available colors of the items for sale. This use of drop-down menus is most likely an example of which type of internal controls?

Errors in accounting are, in general, equally likely to make a company look better or to make it look worse.

Misstatements can arise at several different stages of the accounting process, including the recognition and summarization phases.

"Reconciliation" is the process of comparing two sets of figures, and explaining any differences.

The feature of an accounting information system that allows a person to verify that the reports are correct, and based on properly processed information, is the "audit trail."

The accounting record that is used to initially record transactions at the time they occur is called a "journal."

Describe the major objectives of a system of internal control.

A company has a policy that only the chief financial officer or the chief executive officer are allowed to sign checks. This is an example of which type of general accounting control?

Which of the following is the clearest example of a detection control?

A company has a policy that the internal audit department should audit records of every division once each year. This is an example of which type of general accounting control?

Normally, it is cheaper and easier to use detective controls to catch problems that have occurred than to use preventive controls to try to avoid problems occurring.