Multiple Choice questions 1. What is the primary role of internal controls in managing a business? a.

Question:

Multiple Choice questions
1. What is the primary role of internal controls in managing a business?
a. To prevent cash from being stolen.
b. To constrain subordinates’ activities in order to prevent employees from deviating from the scope of their responsibilities and encouraging them to act in the best interest of the business.
c. To ensure that the are presented in such a manner as to provide relevant and reliable information for financial statement users and the company’s creditors.
d. To encourage theft and to ensure that segregation of duties does not take place.
2. Which of the following is not one of the three areas for which internal control systems are intended to provide reasonable assurance?
a. Certification that the are without error
b. Compliance with applicable laws and regulations
c. Effectiveness and efficiency of operations
d. Reliability of financial reporting
3. Which of the following is not one of the five elements of internal control?
a. Risk assessment
b. Information and communication
c. Control environment
d. Analysis of control procedures
4. Which of the following is not one of the five categories of control activities?
a. Defalcation and financial reporting
b. Checks on recorded amounts
c. Clearly defined authority and responsibility
d. Segregation of duties
5. The internal audit function is part of what element of the internal control system?
a. Control Environment
b. Control Activities
c. Monitoring
d. Risk Assessment
6. Which of the following is not generally an internal control activity?
a. Establishing clear lines of authority to carry out specific tasks
b. Physically counting inventory in a perpetual inventory system
c. Limiting access to computerized accounting records
d. Reducing the cost of hiring seasonal employees
7. Allowing only certain employees to order goods and services for the company is an example of what internal control procedure?
a. Proper authorizations
b. Segregation of duties
c. Safeguarding of assets and records
d. Independent verifications
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...