Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

PART 8: INTERNAL CONTROL10 POINTS 1) Which of the following is TRUE of internal control? A) A company's outside auditor is responsible for the company's

PART 8: INTERNAL CONTROL10 POINTS

1) Which of the following is TRUE of internal control?

A) A company's outside auditor is responsible for the company's internal control system.

B) One of the major purposes of internal control is to ensure that the assets are safeguarded.

C) Internal control procedures tend to diminish the importance of operational efficiency.

D) Internal controls are only necessary for public companies.

2) Which of the following is a requirement of the Sarbanes-Oxley Act?

A) An outside auditor must evaluate the client's internal controls and report on the internal controls as part of the audit report.

B) The Public Company Accounting Oversight Board must conduct audits of public companies.

C) The accounting firm that audits a public client must also provide consulting services for the same client.

D) The Public Company Accounting Oversight Board must create new accounting standards.

3) Which of the following statements is TRUE of the Sarbanes-Oxley Act?

A) Accounting firms are allowed to provide both auditing services and a full range of consulting services to their public company clients.

B) Those who commit securities fraud must be sentenced to 10 years in prison.

C) All private and foreign companies must issue an internal control report evaluated by an outside auditor.

D) The Public Company Accounting Oversight Board oversees the work of auditors of public companies.

4) Which of the following components of internal control consist of work performed by internal and external auditors?

A) monitoring of controls

B) information systems

C) control procedures

D) control environment

5) Which of the following describes the environment in internal control?

A) Internal auditors monitor company controls to safeguard assets, and external auditors monitor the controls to ensure that the accounting records are accurate.

B) The environment is the "tone at the top" of the business.

C) The environment is designed to ensure that the business earns profit.

D) A company must identify its risks.

6) Which of the following describes the risk assessment component of internal control?

A) Internal auditors monitor company controls to safeguard assets, and external auditors monitor the controls to ensure that the accounting records are accurate.

B) Risk assessment is the "tone at the top" of the business.

C) A company must identify its risks and take necessary steps to minimize them.

D) Risk assessment is designed to ensure that the business's goals are achieved.

7) Which of the following is TRUE of the internal control componentinformation system?

A) Internal auditors monitor company controls to safeguard assets, and external auditors monitor the controls to ensure that the accounting records are accurate.

B) Control procedures are designed to ensure that the business's goals are achieved.

C) Only authorized users have access to various parts of the information system.

D) The information system is the "tone at the top" or the culture of the business.

8) Which of the following illustrates the internal control procedureseparation of duties?

A) Cashiers must not have access to accounting records.

B) External auditors will monitor internal controls.

C) Electronic devices must be installed to reduce theft.

D) The invoices and other documents must be pre-numbered.

9) Which of the following is NOT an appropriate internal control for cash receipts over the counter?

A) A receipt is issued for each transaction to ensure that each sale is recorded.

B) The store clerk deposits the cash in the bank.

C) At the end of the day, the manager proves the cash by comparing the cash in the drawer against the machine's record of cash sales.

D) The cash draw opens after the store clerk enters a transaction.

10) Vaughan Services hires a new accountant to maintain its petty cash fund. Although the employee possesses an accounting degree, he/she had been previously convicted of embezzlement. Which internal control procedure needs to be addressed in this situation?

A) assignment of responsibilities

B) competent, reliable, and ethical personnel

C) separation of duties

D) documents

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Payroll Accounting

Authors: Bernard J Bieg, Judith A Toland

29th Edition

1337673196, 9781337673198

More Books

Students also viewed these Accounting questions