A physical count of inventory is required even though the company uses the perpetual inventory system. What can be said of this procedure? a. It is a good example of physical controls. b. It is a good example of documentation adequacy. c. It is a good example of authorization of transactions and other business activities. d. It is a good example of independent checks on performance. The internal control system provides reasonable assurance that the company's objectives are being met in all of the following areas EXCEPT which one? a. compliance with applicable laws and regulations b. consolidation of departments within the accounting function c. effectiveness and efficiency of the company's operations d. reliability of financial reporting Which of the following is a sound internal control procedure for cash disbursements? a. paying with petty cash to expedite the payment process b. designating an authorized cheque signer who has cash record-keeping responsibilities c. marking supporting documents when paid to prevent duplicate payment d. paying with cash as often as possible to minimize administrative effort and bank fees Which of the following documents is used in the control of cash receipts? a. bank debit memos b. outstanding cheques c. bank deposit slips d. cancelled cheques Which of the following statements is characteristic of monitoring activities within the internal control system? a. The board of directors need not be concerned with results of the monitoring of the internal control system. b. Monitoring of internal control activities is not required if the company hires honest, ethical employees. c. Monitoring of the internal control system is the responsibility of the company's external auditors. d. Monitoring of the internal control system is the responsibility of management. Which of the following reflects strong internal control? a. The person who opens the mail also makes the journal entry to record any customer payments received by mail. b. Physical inventory counts are not performed because the company uses a perpetual inventory system. c. A company ships goods to customers right before year-end even though the customers have not ordered them. d. It takes two days to get a cheque written because of the approvals required. Which of the following is NOT characteristic of internal control? a. A well-designed system of internal controls should be the goal of every organization. b. It is not possible to design a foolproof system of internal controls. c. Separation of duties is the easiest control activity to implement in small companies. d. It is easiest to implement effective internal controls in large companies that are able to devote substantial resources to those systems. Which of the following statements is characteristic of good internal control? a. Cash should be deposited infrequently to minimize bank fees. b. Disbursements should be paid for using pre-numbered cheques. c. Petty cash can be substituted for a chequing account to expedite the payment of all disbursements. d. The person handling cash should also prepare the bank reconciliation. A company limits access to computerized accounting records. What can be said of this procedure? a. It violates proper segregation of duties. b. It is a good example of physical controls. c. It is a good example of independent checks on performance. d. It violates adequate documents and records
