1. Which document is NOT prepared by the sales
The underlying assumption of reasonable
department?
c. bill of lading
2. Which document triggers the update of the
inventory subsidiary ledger?
b. stock release
3. Which function should the billing department
NOT perform?
c. send the stock release document and the
shipping notice to the billing department as
proof of shipment
4. When will a credit check approval most likely
require specific authorization by the credit
department?
b. when verifying that the current transaction
is with a valid customer
5. Which type of control is considered a compensating
control?
c. supervision
6. Which of the following is NOT an independent
verification control?
c. The use of prenumbered sales orders.
7. Which function or department below records
the decrease in inventory due to a sale?
d. inventory control
8. Which situation indicates a weak internal control
structure?
a. the AR clerk authorizes the write off of bad
debts
9. The bill of lading is prepared by the
c. shipping clerk.
10. Which of following functions should be
segregated?
a. opening the mail and recording cash receipts
in the journal
1. 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?
b. prevention of employee collusion to commit fraud
2. 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.
3.
assurance regarding implementation of internal control
means that
c. implementation of the control procedure
should not have a significant adverse effect
on efficiency or profitability.
4. To conceal the theft of cash receipts from customers
in payment of their accounts, which of
the following journal entries should the book
keeper make?
d. Sales Returns Accounts Receivable
5. Which of the following controls would best
prevent the lapping of accounts receivable?
c. Require customers to send payments
directly to the company’s bank.
6. Providing timely information about trans
actions in sufficient detail to permit proper
classification and financial reporting is an
example of
c. information and communication.
7. Ensuring that all material transactions
processed by the information system are valid
and in accordance with management’s objectives is an
example of
a. transaction authorization.
8. Which of the following is often called a compensating
control?
a. transaction authorization
b. supervision
c. accounting records
d. independent verification
9. Which of the following is NOT a necessary
condition under common law to constitute a
fraudulent act?
c. written documentation
10. The fraud scheme that is similar to the
“ borrowing from Peter to pay Paul” scheme is
c. lapping.
1. An example of a control designed to validate a
transaction at the point of data entry is
c. a check digit.
2. Application controls are classified as
a. input, processing, and output.
3. Which of the following is NOT an element of the fraud
triangle?
b. Justifiable reliance
4. How are transactions in real-time processing systems
edited?
b. In online mode as transactions are entered
5. In an automated payroll processing environment, a
department manager substituted the time card for a
terminated employee with a time card for a fictitious
employee. The fictitious employee had the same pay
rate
and hours worked as the terminated employee. The
best control technique to detect this action using
employee identification numbers would be to use a
c. hash total.
6. Which of the following is often called a compensating
control?
b. Supervision
7. The underlying assumption of reasonable assurance
regarding implementation of internal control
means that
c. implementation of the control procedure should not
have a significant adverse effect on efficiency or
profitability.
8. Which of the following journal entries would a
bookkeeper make to conceal the theft of cash receipts
from customers in payment of their accounts?
d. Sales Returns Accounts Receivable
9. Which of the following is not an example of
preventive control?
e. Source documents for capturing sales data
10. 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.
11. What name is given to computer programs that are
used for checking the validity and accuracy of
transaction data?
b. Edit programs.
14. Ensuring that all material transactions processed by
the information system are valid and in accordance with
management's objectives is an example of
a. transaction authorization.
12. An employee in the receiving department keyed in
shipment from a remote terminal and inadver- tently
omitted the purchase order number. The best
application control to detect this error would be a
b. missing data check.
15. Which of the following is an example of an input
control?
d. Performing a check-digit test on a customer account
number
13. Which of the following controls would best prevent
the lapping of accounts receivable?
c. separate the tasks of depositing cash receipts and
posting to the AR sub ledger
16. Providing timely information about transactions in
sufficient detail to permit proper classification and
financial reporting is an example of
c. information and communication.
17. The fraud scheme that is similar to the concept of
"borrowing from Peter to pay Paul" is
c. lapping.
18. What is the process for posting to accounting
records in a computer system?
c. Transaction file is updated to a master file. e. Current
balance file is updated to an index file.
19. Which of the following benefits is least likely to
result from a system of internal controls?
b. Prevention of employee collusion to commit fraud
1. Which function or department records a sale in
the sales journal?
a. Billing department
2. Which functions should be segregated?
b. Picking goods from the warehouse shelves and
updating the inventory subsidiary ledger
3. Which of the following is incompatible task?
c. The AR clerk authorizes the write-off of bad debts.
4. Which control helps to ensure that the inventory
items shipped to the customer are the correct type and
the correct amount?
d. Reconcile stock release document and packing slip
5. The bill of lading is prepared by the
c. shipping clerk.
6. Which of the following is NOT an independent
verification control?
d. The billing department reconciles the shipping
notice with the sales invoice to ensure that customers
are billed for only the quantities shipped.
7. Which document defines terms for shipped goods
ownership?
d. Bill of lading
8. Which of the following sets of tasks should not be
separated?
e. All of the above tasks should be separated
9. Which of the following is often called a compensating
control?
a. Supervision
10. Which document triggers the billing function?
a. Shipping notice