Question 1

Employees should be made aware of the firm's commitment to ethics.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is a preventive control?

Accepted Answer

A)  credit check before approving a sale on account 
B)  bank reconciliation 
C)  physical inventory count 
D)  comparing the accounts receivable subsidiary ledger to the control account 
A)  credit check before approving a sale on account 
B)  bank reconciliation 
C)  physical inventory count 
D)  comparing the accounts receivable subsidiary ledger to the control account

Question 3

Which of the following is correct?

Accepted Answer

A)  check digits should be used for all data codes 
B)  check digits are always placed at the end of a data code 
C)  check digits do not affect processing efficiency 
D)  check digits are designed to detect transcription and transposition errors 
A)  check digits should be used for all data codes 
B)  check digits are always placed at the end of a data code 
C)  check digits do not affect processing efficiency 
D)  check digits are designed to detect transcription and transposition errors

Question 4

What are the five conditions necessary for an act to be considered fraudulent?

Accepted Answer

A) True 
 B)False

Question 5

The board of directors consists entirely of personal friends of the chief executive officer.This indicates a weakness in

Accepted Answer

A)  the accounting system 
B)  the control environment 
C)  control procedures 
D)  this is not a weakness 
A)  the accounting system 
B)  the control environment 
C)  control procedures 
D)  this is not a weakness

Question 6

According to SAS 78,an effective accounting system performs all of the following except

Accepted Answer

A)  identifies and records all valid financial transactions 
B)  records financial transactions in the appropriate accounting period 
C)  separates the duties of data entry and report generation 
D)  records all financial transactions promptly 
A)  identifies and records all valid financial transactions 
B)  records financial transactions in the appropriate accounting period 
C)  separates the duties of data entry and report generation 
D)  records all financial transactions promptly

Question 7

The importance to the accounting profession of the Sarbanes-Oxley Act is that

Accepted Answer

A)  bribery will be eliminated 
B)  management will not override the company's internal controls 
C)  management are required to certify their internal control system 
D)  firms will not be exposed to lawsuits 
A)  bribery will be eliminated 
B)  management will not override the company's internal controls 
C)  management are required to certify their internal control system 
D)  firms will not be exposed to lawsuits

Question 8

The trend toward distributed data processing increases the exposure to fraud from remote locations.

Accepted Answer

A) True 
 B)False

Question 9

Output controls ensure that output is not lost,misdirected,or corrupted and that privacy is not violated.What are some output exposures or situations where output is at risk?

Accepted Answer

output spooling,dela

Question 10

What are the six broad classes of physical control activities defined by SAS 78?

Accepted Answer

Transaction authorization,segr

Question 11

Which statement is not true? A batch control record

Accepted Answer

A)  contains a transaction code 
B)  records the record count 
C)  contains a hash total 
D)  control figures in the record may be adjusted during processing 
E)  All the above are true 
A)  contains a transaction code 
B)  records the record count 
C)  contains a hash total 
D)  control figures in the record may be adjusted during processing 
E)  All the above are true

Question 12

Use the internal control procedures listed below to complete the statements.
 $\begin{array}{ll}
\text { segregation of duties } & \text { specific authorization } \
\text { general authorization } & \text { accounting records } \
\text { access controls } & \text { independent verification } \
\text { supervision } &
\end{array}$

-The internal audit department recalculates payroll for several employees each pay period.This is an example of __________________________.

Accepted Answer

independen

Question 13

Use the internal control procedures listed below to complete the statements.
 $\begin{array}{ll}
\text { segregation of duties } & \text { specific authorization } \
\text { general authorization } & \text { accounting records } \
\text { access controls } & \text { independent verification } \
\text { supervision } &
\end{array}$

-Not permitting the computer programmer to enter the computer room is an example of _______________________________.

Accepted Answer

segregatio

Question 14

While the Sarbanes-Oxley Act prohibits auditors from providing non-accounting services to their audit clients,they are not prohibited from performing such services for non-audit clients or privately held companies.

Accepted Answer

A) True 
 B)False

Question 15

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?

Accepted Answer

A)  segregation of duties 
B)  accounting records 
C)  accounting system 
D)  access controls 
A)  segregation of duties 
B)  accounting records 
C)  accounting system 
D)  access controls

Question 16

What control issue is related to reentering corrected error records into a batch processing system? What are the two methods for doing this?

Accepted Answer

Errors detected during processing requir

Question 17

The external auditor is responsible for establishing and maintaining the internal control system.

Accepted Answer

A) True 
 B)False

Question 18

Identify to indicate whether each procedure is a preventive or detective control.
a.
authorizing a credit sale
Preventive
Detective
b.
preparing a bank reconciliation
Preventive
Detective
c.
locking the warehouse
Preventive
Detective
d.
preparing a trial balance
Preventive
Detective
e.
counting inventory
Preventive
Detective

Accepted Answer

A.preventive; B.dete

Question 19

The concept of reasonable assurance suggests that

Accepted Answer

A)  the cost of an internal control should be less than the benefit it provides 
B)  a well-designed system of internal controls will detect all fraudulent activity 
C)  the objectives achieved by an internal control system vary depending on the data processing method 
D)  the effectiveness of internal controls is a function of the industry environment 
A)  the cost of an internal control should be less than the benefit it provides 
B)  a well-designed system of internal controls will detect all fraudulent activity 
C)  the objectives achieved by an internal control system vary depending on the data processing method 
D)  the effectiveness of internal controls is a function of the industry environment

Question 20

The most cost-effective type of internal control is

Accepted Answer

A)  preventive control 
B)  accounting control 
C)  detective control 
D)  corrective control 
A)  preventive control 
B)  accounting control 
C)  detective control 
D)  corrective control

Employees should be made aware of the firm's commitment to ethics.

Which of the following is a preventive control?

Which of the following is correct?

What are the five conditions necessary for an act to be considered fraudulent?

The board of directors consists entirely of personal friends of the chief executive officer.This indicates a weakness in

According to SAS 78,an effective accounting system performs all of the following except

The importance to the accounting profession of the Sarbanes-Oxley Act is that

The trend toward distributed data processing increases the exposure to fraud from remote locations.

Output controls ensure that output is not lost,misdirected,or corrupted and that privacy is not violated.What are some output exposures or situations where output is at risk?

What are the six broad classes of physical control activities defined by SAS 78?

Which statement is not true? A batch control record

While the Sarbanes-Oxley Act prohibits auditors from providing non-accounting services to their audit clients,they are not prohibited from performing such services for non-audit clients or privately held companies.

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?

What control issue is related to reentering corrected error records into a batch processing system? What are the two methods for doing this?

The external auditor is responsible for establishing and maintaining the internal control system.

The concept of reasonable assurance suggests that

The most cost-effective type of internal control is

The Information System: an Accountants Perspective

Introduction to Transaction Processing

The Revenue Cycle

The Expenditure Cycle Part I: Purchases and Cash Disbursements Procedures

The Expenditure Cycle Part Ii: Payroll Processing and Fixed Asset Procedures

The Conversion Cycle

General Ledger,financial Reporting,and Management Reporting Systems

Database Management Systems

The Rea Approach to Business Process Modeling

Enterprise Resource Planning Systems

Electronic Commerce Systems

Managing the Systems Development Life Cycle

Construct,deliver,and Maintain Systems Projects

IT Controls Part I: Sarbanes-Oxley and It Governance

IT Controls Part II: Security and Access

IT Controls Part III: Systems Development, program Changes, and Application Controls

Filters

Exam 3: Ethics,fraud,and Internal Control

Employees should be made aware of the firm's commitment to ethics.

Which of the following is a preventive control?

Which of the following is correct?

What are the five conditions necessary for an act to be considered fraudulent?

The board of directors consists entirely of personal friends of the chief executive officer.This indicates a weakness in

According to SAS 78,an effective accounting system performs all of the following except

The importance to the accounting profession of the Sarbanes-Oxley Act is that

The trend toward distributed data processing increases the exposure to fraud from remote locations.

Output controls ensure that output is not lost,misdirected,or corrupted and that privacy is not violated.What are some output exposures or situations where output is at risk?

What are the six broad classes of physical control activities defined by SAS 78?

Which statement is not true? A batch control record

While the Sarbanes-Oxley Act prohibits auditors from providing non-accounting services to their audit clients,they are not prohibited from performing such services for non-audit clients or privately held companies.

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?

What control issue is related to reentering corrected error records into a batch processing system? What are the two methods for doing this?

The external auditor is responsible for establishing and maintaining the internal control system.

The concept of reasonable assurance suggests that

The most cost-effective type of internal control is

The Information System: an Accountants Perspective

Introduction to Transaction Processing

The Revenue Cycle

The Expenditure Cycle Part I: Purchases and Cash Disbursements Procedures

The Expenditure Cycle Part Ii: Payroll Processing and Fixed Asset Procedures

The Conversion Cycle

General Ledger,financial Reporting,and Management Reporting Systems

Database Management Systems

The Rea Approach to Business Process Modeling

Enterprise Resource Planning Systems

Electronic Commerce Systems

Managing the Systems Development Life Cycle

Construct,deliver,and Maintain Systems Projects

IT Controls Part I: Sarbanes-Oxley and It Governance

IT Controls Part II: Security and Access

IT Controls Part III: Systems Development, program Changes, and Application Controls

Filters