True or False

1. Risks that lead to frequent losses, such as an increasing incidence of employee-related problems or difficulties with suppliers, can often be solved using present experience.

2. Getting the best value means achieving a balance between the price paid and the quality received.

3. The break-even will result neither a profit nor a loss is made.

4. To reduce the chances of things going wrong, focus on the quantity of what people do - doing the right things right reduces risks and costs.

5. It is more difficult to assess the risks inherent in a business decision than to identify them.

6. Management information system must reach the right people at the right time so that they can investigate and take corrective actions.

7. Successful businessmen and decision-makers make sure that the risks resulting from their decisions are measured, understood and as far as possible eliminated.

8. Avoiding a risk may mean avoiding potentially big opportunity.

9. Adequate assurance is one of the typical areas of organizational risk

10. Risk management procedures and technique be well documented, clearly communicated, regularly review monitored.

11. General controls are activities that prevent or detect errors or irregularities for all accounting systems while application control are controls that pertain to the processing of a specific type of transactions.

12. Intent to deceive is what distinguish fraud and error.

13. The auditor is the primarily responsible for the prevention and detection of fraud.

14. Monitoring is the process that an entity uses to assess the quality of internal control over time.

15. Fraud is either intentional or unintentional misstatement of the financial statements, depending on materiality and consistency

16. Information processing controls are policies and procedures designed to require authorization of transactions and to ensure the accuracy and completeness of transaction processing.

17. Intentional misapplication of accounting principles is one of the common ways that asset misappropriation might occur by employees.

18. External controls are policies and procedures adopted by the management of the entity to assist in achieving management's objectives.

19. Misappropriation of assets is normally perpetrated by employees at lower levels of the organization.

20. Errors pertains to intentional act but those fraud are not intentional.

____21. The primary responsibilities for designing and implementing and maintaining internal control, and the tone of internal control typically originates, rest with the auditor.

Multiple choice

1. The following are the practical consideration in managing and reducing financial risk, except

A. Improve profitability

B. Avoid pitfalls

C. Reduce financial risk

D. Avoiding and mitigating risks

2. The following principles will help to avoid flawed financial decision making, except

A. Understand the impact of cash flows

B. Know where the risk lies

C. Consider the impact of financial decisions

D. Avoid strong budgetary control

3. Among are the practical techniques to improve profitability, except

A. Focus decision-making on the most profitable areas.

B. Consider how to increase profitability by managing people

C. Consider how to create lesser value from existing customers and products to enhance profitability.

D. Manage development and production decisions.

4. Identifying the risk is very significant to the organization; once risks are identified they can be ranked according to their potential impact and likelihood of them occurring.

Among are significant types of risk catalyst, except

A. Technology

B. People

C. External Factors

D. Risk assessment

5. The following are the practical guidance on how to control cost, which of the following is correct?

A. Maintain a balance between cost and sales

B. Use budgets for dynamic financial statements

C. Focus on the small items for expenditures

D. Eliminate waste.

6. The following are some of the practical techniques to improve profitability, except

A. Make sure old products enhance overall profitability.

B. Consider how to increase profitability by managing people

C. Set the buying policy

D. Focus decision-making on the most profitable areas.

7. Break-even point means

A. Sales is greater than cost

B. Sales is less than cost

C. When sales cover cost

D. The entity gain profit or incur loss

8. Common causes of variances are the following, except

A. Inefficiency

B. Poor communication

C. Poor or flawed planning

D. Effective controls

9. To reduce financial risk positive replies to the following questions would assist top management to manage financial risk, except

A. Is there a positive attitude to budgets and budgeting?

B. What are the least profitable parts of the organizations? How will they improve?

C. Are the most effective and relevant performance measures in place to monitor and assess the effectiveness of financial decisions?

D. How can effectiveness of marketing activities be increased?

10. The following are the consideration about financial decisions and explain how to improved profitability except

A. Variance analysis

B. Break-even analysis

C. Profit control

D. Assessment of market entry and exit barriers

11. It is an active tool to help make financial decisions, not merely a way to measure performance

A. Budget

B. Break -even analysis

C. Variance analysis

D. Probability analysis

12. Managers have financial responsibilities and their decisions will often be influenced by or have an impact on other parts of the business. The following are the principles that will help to avoid flawed financial decision-making, except

A. Know where the risk lies

B. Financial expertise must be widely available

C. Understand the impact of cash flows

D. Manage development and production decisions.

13. Which of the following is not a source of risk?

A. Functional risk

B. Environmental risk

C. Political risk

D. Technology risk

14. Which of the following statements best describe risk?

A. Uncertainty when looking at the past

B. Certainty of not suffering harm or loss

C. Clarity in future decisions

D. Uncertainty when looking to the future

15. What is risk?

A. Negative consequence that could occur

B. Negative consequence that will occur

C. Negative consequence that must occur

D. Negative consequence that shall not occur