ACC 112 Pre Final Quiz 2 PDF

ACC112: CORPORATE GOVERNANCE, BUSINESS ETHICS,
RISK MANAGEMENT AND INTERNAL CONTROL

Student Activity Sheet Module #24
Name: ____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________
Materials:
LEARNING OBJECTIVE: Student Activity Sheet::
This assessment measures the competence of the student in terms

of his/her application of knowledge and skills in the following topics:
1. Corporate Governance
2. Business Ethics
3. Risk management
4. Internal Control
ACC 112 - CORPORATE GOVERNANCE, BUSINESS ETHICS, RISK MANAGEMENT AND INTERNAL
CONTROL
P3 Quiz 2
GENERAL DIRECTIONS
READ THIS PAGE BEFORE STARTING THE ASSESSMENT
This test is composed of one (1) section and has a total score of eighty (40) points. Choose the letter of
the correct answer and encode your answers in the gform that will be provided.
MULTIPLE CHOICE
1. A situation a person faces in which a decision must be made about the appropriate behavior.
a. Ethical Issues
b. Ethical management
c. Ethical challenge
d. Ethical dilemma
2. If the chance of loss is high and loss severity is high, generally the most appropriate risk management
tool is
a. risk sharing
b. risk avoidance
c. risk reduction
d. risk transfer
3. Which ISO standard enlist principles and guidelines on implementation, the process of risk
management:
a. 11000
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b. 21000
c. 31000
d. 41000
4. What is the process of steps taken during risk management?

a. identification, analysis, treatment, monitoring, review
b. identification, analysis, monitoring and review, treatment
c. analysis, identification, treatment, monitoring and review
d. identification, treatment, analysis, monitoring, review
5. When there’s an _______and the risk is ______compared to the benefits obtained, corruption is most
likely to occur.
a. opportunity; minimal
b. incentives; minimal
c. opportunity; high
d. incentives; high
6. Which of the following is not objective of internal control?
a. reliability of financial reporting.
b. efficiency and effectiveness of operation.
c. compliance with laws and regulations.
d. assurance of elimination of business risk
7. A company frequently sells products at price below inventory cost. Essential control in the risk
assessment process would include:
a. adequate control that address the risk of overstating inventory.
b. adequate control that address the risk of not including a purchased item in inventory.
c. adequate controls that address the risk of understatement of inventory.
d. adequate controls that address the risk of overstatement of cost of goods sold.
8. Internal controls are not designed to provide reasonable assurance that

a. all frauds will be detected.
b. transactions are executed in accordance with management's authorization.
c. access to assets is permitted only in accordance with management's authorization.
d. company personnel comply with applicable rules and regulations.
9. The most cost-efficient type of internal control is

a. accounting control
b. detective control
c. preventive control
d. corrective control
10. Which of the following suggest a weakness in internal control environment?

a. a firm that has an up-to-date organizational chart.


b. monthly reports comparing actual performance to budget are distributed to managers.

c. performance evaluations are prepared every three years.
d. the audit committee meet quarterly with external auditors.
11. Which of the following is not an internal control procedure?

a. authorization
b. management operating cycle
c. independent verification
d. accounting records.
12. Which one of the following below is not an element of internal control?
a. risk assessment
b. cost-benefit considerations
c. information and communication
d. monitoring
13. Which one of the following below is not a factor that influences a business's control environment?
a. management's philosophy and operating style.
b. organizational structure
c. personnel policies
d. proofs and security measurers
14. The objectives of internal control are to

a. provide reasonable assurance that operations are managed to achieve goals, financial reports are
accurate, and laws and regulations are complied with.
b. provide control over "internal-use only" reports and employee internal conduct.
c. prevent fraud, and promote the social interest of the company.
d. control the internal organization of the accounting department personnel and equipment.
15. Which one of the following below reflects a weak internal control system?
a. all employees are well supervised
b. a single employee is responsible for comparing a receiving report to an invoice.
c. ` all employees must take their vacations.
d. a single employee is responsible for collecting and recording of cash
16. Internal control does not consist of policies and procedures that
a. ensure that business information is accurate
b. guarantee the company will not go bankrupt
c. aid management in directing operations toward achieving business goals
d. protect assets from misuse
17. An element of internal control is

a. journals
b. risk assessment


c. subsidiary ledger
d. controlling accounts
18. A firm’s internal control environment is not influenced by

a. management's operating style
b. monitoring policies
c. personnel policies
d. organizational structure
19. A necessary element of internal control is

a. systems design
b. system analysis
c. information and communication
d. database
20. The cash account in the company's ledger is a(n)

a. asset with a debit balance
b. asset with a credit balance
c. liability with a debit balance
d. liability with a credit balance
21. An example of a preventive control is

a. a single person handles the responsibilities for operations, custody of assets, and accounting.
b. separation of the Purchasing Department and Accounting Department personnel
c. bonding employees who handle cash
d. accepting payment in currency only
22. The reconciliation of the cash register tape with the cash in the register is an example of
a. other controls
b. independent internal verification
c. establishment of responsibility
d. segregation of duties
23. Which of the following is not an internal control activity for cash?
a. All cash receipts should be recorded promptly.
b. The number of persons who have access to cash should be limited.
c. Surprise audits of cash on hand should be made occasionally.
d. The functions of record keeping and maintaining custody of cash should be combined.
24. A bank reconciliation should be prepared periodically because

a. the company's records and the bank's records are in agreement
b. the bank has not recorded all of its transactions
c. any differences between the company's records and the bank's records should be determined, and
any errors made by either party should be discovered and corrected


d. the bank must make sure that its records are correct
25. Which of the following is not a limitation of the internal control system?
a. fraud occurs because of collusion between two employees
b. the industry is inherently risky
c. management instructs the bookkeeper to make fraudulent journal entries
d. All of the above
26. Which of the following is a preventive control?

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
27. A physical inventory count is an example of a

a. preventive
b. corrective
c. detective
d. feed-forward control
28. Which of the following indicates a strong internal control environment?

a. the internal audit group reports to the audit committee of the board of directors
b. adverse business conditions exist in the industry
c. here is no segregation of duties between organization functions
d. there are questions about the integrity of management
29. According to COSO, an effective accounting system performs all of the following except
a. identifies and records all valid financial transactions
b. separates the duties of data entry and report generation
c. records financial transactions in the appropriate accounting period
d. records all financial transactions promptly
30. Which of the following is the best reason to separate duties in a manual system?
a. to avoid collusion between the programmer and the computer operator
b. to ensure that supervision is not required
c. to prevent the record keeper from authorizing transactions
d. to enable the firm to function more efficiently
31. The decision to extend credit beyond the normal credit limit is an example of
a. . independent verification
b. authorization
c. segregation of duties
d. supervision


32. When duties cannot be segregated, the most important internal control procedure is
a. authorization
b. supervision
d. segregation of duties
33. An accounting system that maintains an adequate audit trail is implementing which internal control
procedures?
a. access controls
b. segregation of duties
d. accounting records
34. The board of directors consists entirely of personal friends of the chief executive officer. This indicates
a weakness in
a. the accounting system
b. the control environment
c. control procedures
d. this is not a weakness
35. Management can expect various benefits to follow from implementing a system of strong internal
control. Which of the following benefits is least likely to occur?
a. reduced cost of an external audit.
b. prevents employee collusion to commit fraud.
c. availability of reliable data for decision-making purposes.
d. some assurance that important documents and records are protected.
36. . Which of the following situations is not a segregation of duties violation?

a. The treasurer has the authority to sign checks but gives the signature block to the assistant
treasurer to run the check-signing machine.
b. The sales manager has the responsibility to approve credit and the authority to write off accounts.
c. The department time clerk is given the undistributed payroll checks to mail to absent employees.
d. The warehouse clerk, who has the custodial responsibility over inventory in the warehouse, selects
the vendor and authorizes purchases when inventories are low.
37. Inherent risk

a. exists because all control structures are flawed in some ways
b. is the likelihood that material misstatements exist in the financial statements of the firm
c. is associated with the unique characteristics of the business or industry of the client.
d. is the likelihood that the auditor will not find material misstatements
38. Internal control over cash disbursement is more effective when payments are made by:
a. check
b. cash


c. both a and b
d. none of the above
39. The concept of reasonable assurance rest on the premise that:

a. rotating employees’ duties.
b. requiring employees to take vacation.
c. the cost of establishing control procedures should not exceed their expected benefit.
d. physical, mechanical, and electronic controls.
40. The following measure is recommended to obtain maximum benefit from independent internal
verification:
a. The verification should be made periodically or on a surprise basis.
b. The verification should be done by an employee who is independent of the personnel responsible
for the information.
c. Discrepancies and exceptions should be reported to a management level that can take appropriate
corrective action.
d. all of the above.
-NOTHING FOLLOWS-

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ACC112: CORPORATE GOVERNANCE, BUSINESS ETHICS,

RISK MANAGEMENT AND INTERNAL CONTROL

Name: ____________________________________________________________ Class number: _______

This assessment measures the competence of the student in terms

This document is the property of PHINMA EDUCATION

Name: ____________________________________________________________ Class number: _______

4. What is the process of steps taken during risk management?

8. Internal controls are not designed to provide reasonable assurance that

9. The most cost-efficient type of internal control is

10. Which of the following suggest a weakness in internal control environment?

This document is the property of PHINMA EDUCATION

Name: ____________________________________________________________ Class number: _______

b. monthly reports comparing actual performance to budget are distributed to managers.

11. Which of the following is not an internal control procedure?

14. The objectives of internal control are to

17. An element of internal control is

This document is the property of PHINMA EDUCATION

Name: ____________________________________________________________ Class number: _______

18. A firm’s internal control environment is not influenced by

19. A necessary element of internal control is

20. The cash account in the company's ledger is a(n)

21. An example of a preventive control is

24. A bank reconciliation should be prepared periodically because

This document is the property of PHINMA EDUCATION

Name: ____________________________________________________________ Class number: _______

26. Which of the following is a preventive control?

27. A physical inventory count is an example of a

28. Which of the following indicates a strong internal control environment?

This document is the property of PHINMA EDUCATION

Name: ____________________________________________________________ Class number: _______

36. . Which of the following situations is not a segregation of duties violation?

37. Inherent risk

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Name: ____________________________________________________________ Class number: _______

39. The concept of reasonable assurance rest on the premise that:

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