Reference no: EM132483168

Question 1: Internal control is said to be the backbone of all businesses. Which of the following is the best description of internal controls?

1. Internal controls and company policies are important to protect and safeguard assets and to protect all company data and are designed to protect the company from fraud.
2. The only role of internal controls is to protect customer data.
3. Internal controls are designed to keep employees from committing fraud against the company.
4. Internal controls ensure that the financial statements published are correct.

Question 2: Which of the following is not considered to be part of the internal control structure of a company?

1. Ensure assets are properly used.
2. Ensure that assets are kept secure.
3. Publish accurate financial statements on a regular basis.
4. Monitor operations of the organization to ensure maximum efficiency.

Question 3: A company is trying to set up proper internal controls for their accounts payable/inventory purchasing system. Currently the purchase order is generated by the same person who receives the inventory. Together the purchase order and the receiving ticket are sent to accounts payable for payment. What changes would you make to improve the internal control structure?

1. The person in accounts payable should generate the purchase order.
2. No changes would be made since the person paying the bills is different from the person ordering the inventory.
3. The person in accounts payable should generate the receiving ticket once the invoice from the supplier is received.
4. The responsibilities of generating the purchase order and receiving the inventory should be separated among two different people.

Question 4: Which one of the following documents is not needed to process a payment to a vendor?

1. check request
2. vendor invoice
3. purchase order
4. packing slip

Question 5: Which of the following assets require the strongest of internal controls?

1. cash
2. credit cards
3. inventory
4. computer equipment

Question 6: The external auditor of a company has certain requirements due to Sarbanes-Oxley. Which of the following best describes these requirements?

1. The auditor is required to only report weaknesses in the internal control design of the company he or she is auditing.
2. The Public Company Accounting Oversight Board reviews reports submitted by the auditors when no evaluations have been performed.
3. The auditor in charge can serve for a period of only two years.
4. The auditor must issue an internal control report on the evaluation of internal controls overseen by the Public Company Accounting Oversight Board

Question 7: A company has decided to start a petty cash fund for $150. Which of the following is the correct journal entry?

A. Petty Cash $150

Cash $150

B. Cash $150

Petty Cash $150

C. Expenses $150

Petty Cash $150

1. C
2. None of the above
3. B
4. A

Question 8: Which of the following are found on the bank side of the bank reconciliation?

1. interest income
2. NSF check
3. deposit in transit
4. wire transfer into client's account

Question 9: What would be a reason a company would want to overstate income?

1. to help nudge its stock price higher
2. to lower its tax bill
3. to show a decrease in overall profits
4. none of the above