1. Which of the following controls would be classified as a processing control?

Monthly payroll transactions are automatically posted to the payroll subledger.

Distribution of the shipping report to the production supervisor to ensure accurate shipments are made

Review of monthly budget to actual expenditures.

Reconciliation of total cash deposit per bank to the total receipts recorded in the general ledger.

2. A company only sells good for under $100 and therefore, has a restriction in the cash register software which will not allow a cashier to enter an amount over $100 when making a sale. This is an example of a preventive control.

T/F

3. Which of the following would be the best example of an organization selecting, developing, and performing ongoing and/or separate evaluations to determine if components of internal control are present and functioning?

Using prenumbered paper documents

Acquiring software to automate the review of all payment transactions and identify anomalies

A policies and procedures manual that all company employees are aware of

Brainstorming sessions to determine how or where fraud could occur

4. JKJ Industries is a large public manufacturing company with a few large customers who pay for the product at the time the product is delivered. Which of the following statements is accurate?

Controls over accounts payable would be more important than controls over inventory

Management would likely try to understate assets and revenues

Inventory would be considered a significant account

A walkthrough would not help determine the effectiveness of controls over inventory

5. ABC Company was opening a new manufacturing plant in a foreign country. In order to obtain the business of the government in that country, the management of ABC Company was asked by one official to make a payment of $10,000 to their personal account. This is known as a grease payment and is allowed under the Foreign Corrupt Practices Act of 1977.

T/F