Reference no: EM132345412
Question
TRUE/FALSE.
1) The control environment is one of the five components by which a company can achieve its internal control objectives.
2) Risk assessment is the "tone at the top" of a business, starting with the owner and the top managers
3) External auditors monitor company controls to safeguard assets and ensure that employees are following company policies.
4) Internal auditors evaluate company controls to ensure the accuracy of financial statements
5) Mandatory vacations and job rotation improve internal control.
6) Separation of duties limits fraud and promotes the accuracy of the account records
7) A point-of-sale terminal (cash register) provides control over cash in the form of a tape record of sales which is compared to the count of the drawer.
8) As part of the internal control over cash receipts by mail, the mailroom sends both the customer checks and the remittance advices to the accounting department.
9) Regarding controls over cash receipts by mail, the bank deposit slip should be compared to the remittance advices by the accounting department.
10) For strong controls over cash receipts, the checks to be deposited should be sent to the treasurer and the remittance advices should be sent to the accounting department.
11) As long as the same person deposits customer checks and records the deposits into the ledger, there will be good internal control over cash receipts.
12) An accountant is under pressure to maximize the company's net income at year-end. He is told to delay orders of important services until the following year. This action would be considered unethical because it is a misrepresentation of actual transactions.
13) An accountant is under pressure to maximize the company's net income at year-end. He is told to record expense payments made in December as if they were actually made the following January. This action would be considered unethical because it is a misrepresentation of actual transactions.
14) A company makes a legitimate, properly authorized payment to a supplier. The accountant changes the date of the transaction to shift it to a later time period. Because the transaction is legitimate, this action would not be considered unethical.
15) A company urgently needs to repair its fire alarm system, which will cost $6,000. The two senior managers who are authorized to approve payments over $5,000 are both on holiday and cannot be reached. The office manager is only authorized to approve payments up to $5,000, but is concerned about the risks and safety factors involved, and wants to have the repair work done immediately.
She asks if the contractor could split up the repair bill into two separate invoices, one for parts, and one for labor, so that she could approve both of them separately, and get the work done right away. This action would not be considered unethical, as long as the office manager does not violate specific company rules, or deliberately misrepresent the facts of the situation.
16) The two major types of receivables are accounts receivable and notes receivable.
17) The creditor is the entity that signs a note.
18) The allowance method is a method of recording collection losses by estimating uncollectible amounts.
19) The income statement approach computes uncollectible accounts expense as a percentage of net credit sales.
20) The direct write-off method conforms to the matching principle better than the allowance method