1.Which of the following would not be a feature of a system of internal control over cash?

all major disbursements are made by cheque

work and responsibilities of cash handling and recording are divided in such a way that errors are readily disclosed and the possibility of irregularities is reduced

None of the other alternatives are correct

insider trading is reported

all cash receipts are deposited intact in the bank each day

2.Choose the word or phrase which best completes the following sentence. Auditing is a systematic process of objectively obtaining and evaluating regarding assertions about actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to users.

management statements

None of the other alternatives are correct

evidence

criteria

opinions

3.The following definition pertains to which accounting principle or convention: assets are recorded and subsequently reported at their acquisition prices.

Materiality

None of the other alternatives are correct

Going concern

Matching

Monetary unit

4.The concept of "materiality" represents which of the following ideas:

None of the other alternatives are correct

If the owner of a company donates new computers but the company already has computers that it is using in the business, it would not be recorded because it is not "material".

An item is "material" if it will cause a large adjustment when converting cash accounting financial statements to accrual accounting financial statements.

If a company informally agrees to rent premises for their business but has not yet signed a lease, it would not be recorded because it is not "material".

An item is "material" if it is over $100 on either the balance sheet or income statement.

5.You are interviewing for the position of Manager of Accounting for a medium-sized import/export business. The owner of the business explains that the present Manager of Accounting's salary is not fixed but instead is based on the business's profits. The owner explains this practice is consistent with the way the managers of all departments in the business are paid. You observe that continuing such an arrangement is likely to

increase the risk of reported earnings not presenting fairly the results of operations

violate matching

None of the other alternatives are correct

align managers' interests with the owner's and ensure the most accurate financial reporting

be illegal