MGT 209 - Quiz on Chapter 13

Total points25/30
 
ANSWER ALL QUESTIONS HONESTLY.
The respondent's email address (abegaililagan.perez@g.batstate-u.edu.ph) was recorded on
submission of this form.

0 of 0 points
SURNAME, First Name, Middle Initial *
PEREZ, Abegail I.

SECTION *
ACCOUNTANCY 2101
ACCOUNTANCY 2102
ACCOUNTANCY 2103
ACCOUNTANCY 2104
ACCOUNTANCY 2106
ACCOUNTANCY 2108
ACCOUNTANCY 2110
MANAGEMENT ACCOUNTING 2101
MANAGEMENT ACCOUNTING 2102
MANAGEMENT ACCOUNTING 2103

MCQ and T/F

25 of 30 points
Choose the BEST answer.

 
Internal control can provide absolute assurance that organizational objectives will be
achieved. *
1/1
True
False
 
 
Effective internal control *
0/1
Eliminates risk and potential loss to the organization.
Cannot be circumvented by management.
Is unaffected by changing circumstances and conditions encountered by the organization.
 
Reduces the need for management to review exception reports on a day-to-day basis.

 
The primary responsibility for establishing and maintaining an internal control rests
with *
1/1
The external auditors
The internal auditors
Management and those charged with governance
 
The controller or the treasurer

 
This refers to internal control deficiency or combination of deficiencies that severely
reduces the likelihood that the entity can achieve its objectives. *
1/1
Significant deficiency
Major deficiency
 
Simple deficiency
Key Audit Matter

 
Inherent limitations in an internal control must be considered in evaluating its
effectiveness in preventing and detecting errors and fraud. Inherent limitations do not
include *
1/1
Misunderstanding of instructions, mistakes of judgment, personal carelessness, distraction, or
fatigue
Incompatible functions performed by the same person
 
Collusion among employees
Management override of certain policies and procedures

 
It is the process that an entity uses to assess the quality of internal control over time. *
1/1
Control environment
Risk assessment
Control activities
Monitoring
 
 
Comparing actual performance with budgets, forecasts, and prior period performance
is an example of *
0/1
Performance review
Information processing control
 
Physical control
Segregation of duties

 
Which of the following best describes the interrelated components of internal
control? *
1/1
Organizational structure, management’s philosophy, and planning
Control environment, risk assessment, control activities, information and communication systems,
and monitoring
 
Risk assessment, backup facilities, responsibility accounting, and natural laws
Internal audit and management’s philosophy and operating styles

 
Internal control can provide only reasonable assurance that the organization’s
objectives and goals will be met efficiently and effectively. One factor limiting the
likelihood of achieving those objectives is that *
1/1
The internal auditor’s primary responsibility is the detection of fraud.
The audit committee is active and independent.
The cost of internal control should not exceed its benefits.
 
Management monitors performance.

 
Which of the following are elements of the control environment? *
1/1
Integrity and ethical values
Organizational structure
Assignment of authority and responsibility
All of the answers are correct.
 
 
An internal auditor is examining inventory control in a merchandising division with
annual sales of P3,000,000 and a 40% gross profit rate. Tests show that 2% of the
monetary amount of purchases do not reach inventory because of breakage and
employee theft. Adding certain controls costing P35,000 annually could reduce these
losses to 0.5% of purchases. Should the controls be recommended? *
0/1
Yes, because the projected saving exceeds the cost of the added controls.
No, because the cost of the added controls exceeds the projected savings.
Yes, because the ideal system of internal control is the most extensive one.
Yes, regardless of cost-benefit considerations, because the situation involves employee theft.
 
 
This control objective pertains to effectiveness and efficiency of the entity’s operations,
including operational and financial performance goals, and safeguarding assets
against loss. *
1/1
Operations objectives
 
Reporting objectives
Compliance objectives
Organization objectives

 
Which term best reflects the attitude and actions of the board and management
regarding the significance of control within the organization? *
1/1
Risk assessment
Control activities
Control environment
 
Monitoring

 
The internal auditor recognizes that certain limitations are inherent in any system of
internal controls. Which one of the following scenarios is the result of an inherent
limitation of internal control? *
0/1
The comptroller both makes and records cash deposits.
 
A security guard allows one of the warehouse employees to remove assets from the premises
without authorization.
The organization sells to customers on account, without credit approval.
An employee, who is unable to read, is assigned custody of the organization’s computer tape
library and run manuals that are used during the third shift.

 
Internal control should follow certain basic principles to achieve its objectives. One of
these principles is the segregation of functions. Which one of the following examples
does not violate the principle of segregation of functions? *
1/1
The treasurer has the authority to sign checks but gives the signature block to the assistant
treasurer to run the check-signing machine.
 
The warehouse clerk, who has the custodial responsibility over inventory in the warehouse, may
authorize disposal of damaged goods.
The sales manager has the responsibility to approve credit and the authority to write off accounts.
The department time clerk is given the undistributed payroll checks to mail to absent employees.

 
COSO treats internal control as a process designed to provide reasonable assurance
regarding the achievement of objectives related to *
1/1
Reliability of financial reporting
Effectiveness and efficiency of operations
Compliance with applicable laws and regulations
All of the answers are correct.
 
 
It is best for the organization to establish good governance, risk management, and
control. Which of the following best describes the common attributes of these three? *
0/1
Organizational objectives and goals will be achieved.
Management’s plans have not been circumvented by collusion of the employees.
The internal audit activity’s guidance and oversight of management’s performance is
accomplished.
Management’s planning, organizing, and directing processes are properly evaluated.
 
 
Basic to a proper control environment are the quality and integrity of personnel who
must perform the prescribed procedures. Which is not a factor in providing for
competent personnel? *
1/1
Segregation of duties
 
Hiring practices
Training programs
Performance evaluations

 
Internal control can ensure the organization’s success. *
1/1
True
False
 
 
Internal control structures vary from one company to the next, depending on factors
such as size of the business, nature of operations, geographical dispersion of
activities, and organizational objectives. *
1/1
True
 
False

 
Internal control, no matter how well designed and operated, can only provide an entity
with reasonable assurance about achieving its objectives. *
1/1
True
 
False

 
Internal control procedures are not designed to provide reasonable assurance that *
1/1
Transactions are executed in accordance with management's authorization.
Access to assets is permitted only in accordance with management's authorization.
Risks will be eliminated.
 
The recorded accountability for assets is compared with the existing assets at reasonable
intervals.

 
The policies and procedures helping to ensure that management directives are
executed, and actions are taken to address risks to achievement of objectives
describe *
1/1
Risk assessments
Control environments
Control activities
 
Monitoring

 
Which of the following are elements included in the control environment? *
1/1
Organizational structure, management philosophy, and planning
Integrity and ethical values, assignment of authority, and human resource policies
 
Competence of personnel, backup facilities, laws, and regulations
Risk assessment, assignment of responsibility, and human resource practices

 
A small entity may use less formal means to ensure that internal control objectives are
achieved. *
1/1
True
 
False

 
The fundamental purpose of an internal control is to *
1/1
Safeguard the resources of the organization
Provide reasonable assurance that the objectives of the organization are achieved
 
Encourage compliance with organization objectives
Ensure the accuracy, reliability, and timeliness of information

 
Which of the following statements is false regarding an effective internal control? *
1/1
Controls ensure that the organization’s objectives will be achieved.
 
Excessive controls are costly in time and money.
Outdated information is inappropriate.
Controls should be simple.

 
Which of the following best defines control? *
1/1
Control provides reasonable assurance that objectives will be achieved.
 
Controls are statements of what the organization chooses to accomplish.
Control is provided when cost-effective measures are taken to restrict deviations to a tolerable
level.
Control accomplishes objectives and goals in an accurate, timely, and economical fashion.

 
Proper segregation of functional responsibilities calls for separation of the functions
of *
1/1
Authorization, recording and custody
 
Authorization, execution, and payment
Custody, execution, and reporting
Authorization, payment, and recording

 
Internal control cannot provide absolute assurance because of certain limitations.
Which of the following is not a limitation to internal control? *
1/1
Suitability of objectives established as a precondition to internal control
Ability of management to override internal control
Business context that affects the organization’s risk profile
Unwillingness of employee to follow internal control procedures
 
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