AC quiz 5

A company's cash receipts procedures include the following. Cashiers collect cash and issue a receipt at the point of sale. Supervisors take custody of the cash at the end of each cashier's shift and deposit it in the bank. Accounting staff then ensure the receipts from cash sales are properly recorded in the accounting system. Which internal control principle is most evident with these procedures? A) Restrict access B) Segregate duties C) Document procedures D) Independently verify

B

If a company hires an auditor to check that the work done by others within the company is supported by documentation, it is doing so under the principle of control activities referred to as: a. segregation of duties. b. independent verification. c. restrict access. d. document procedures.

B

Which of the following is a violation of the principle of segregation of duties regarding cash received in person? a. Cashiers are responsible for the collection of cash and issuing a receipt at the point of sale. b. Members of the accounting department count the cash collected and deposit it in the bank. c. A supervisor is responsible for collecting the cash at the end of each cashiers shift and depositing it in the bank. d. Members of the accounting department are responsible for ensuring that the receipts from cash sales are properly recorded in the accounting system.

B

Which of the following is not a change introduced by the Sarbanes-Oxley Act? a. Management evaluate and report on the effectiveness of internal control over financial reporting. b. Publicly traded companies must have their financial statements audited twice. c. Auditors must audit the internal controls of certain companies. d. Public companies must have tip lines that allow employees to secretly submit concerns about questionable accounting or auditing practices.

B

The Sarbanes-Oxley Act (SOX) requires the establishment of an audit committee that includes the: a. president of the company. b. chief financial officer of the company. c. independent directors. d. companys external auditors.

C

The fraud triangle contains three elements that must exist for accounting fraud to occur. The elements are: a. fear, greed, and satisfaction. b. greed, larceny, and access. c. incentive, opportunity, and rationalization. d. motive, opportunity, and means.

C

The objectives of a company's system of internal control include which of the following? A) Providing innovative products. B) Retaining position as market leader. C) Adhering to laws and regulations. D) Ensuring the company's stock price provides a reasonable return to investors.

C

The use of sequentially numbered checks is an example of: a. establishment of responsibility. b. segregation of duties. c. document procedures. d. independent verification.

C

Which of the following is not a significant objective of the Sarbanes-Oxley (SOX) Act? a. Encourage good character b. Counteract incentives for fraud c. Collect taxes for state and local governments d. Reduce opportunities for fraud

C

Which of the following was passed by Congress in response to financial statement frauds that occurred in the early 2000s? A) Federal Accounting Standards Board Act B) Securities and Exchange Act C) Sarbanes-Oxley Act D) Clayton Act

C

The account Cash Shortage is which type of account? A) An asset account B) A liability account C) A revenue account D) An expense account

D

The fraud triangle contains three elements that must exist for accounting fraud to occur. The elements are: A) fear, greed, and satisfaction. B) greed, larceny, and access. C) motive, opportunity, and means. D) incentive, opportunity, and rationalization.

D

The fraud triangle contains three elements that must exist for accounting fraud to occur. The elements are: a. fear, greed, and satisfaction. b. greed, larceny, and access. c. motive, opportunity, and means. d. incentive, opportunity, and rationalization.

D

Which of the following is a violation of the principle of segregation of duties regarding cash received in person? a. Cashiers are responsible for the collection of cash and issuing a receipt at the point of sale. b. A supervisor is responsible for collecting the cash at the end of each cashiers shift and depositing it in the bank. c. Members of the accounting department are responsible for ensuring that the receipts from cash sales are properly recorded in the accounting system. d. Members of the accounting department count the cash collected and deposit it in the bank.

D

Which of the following statements about internal control is not correct? a. It helps protect against the theft of assets. b. It enhances the reliability of accounting information. c. It promotes efficient and effective operations. d. It guarantees the management will behave ethically.

D

Which of the following is not a significant objective of the Sarbanes-Oxley (SOX) Act? a. Collect taxes for state and local governments b. Encourage good character c. Counteract incentives for fraud d. Reduce opportunities for fraud

A

Which of the following is the primary goal of internal controls for cash payments? A) Ensure that the business pays only for properly authorized transactions. B) Confirm that the request for payments is made by someone who is approved to order goods or services of the type and amount requested. C) Ensure that the supplier charges only for items received at approved prices. D) Make payments only when a purchase is supported by complete voucher documentation.

A

Which of the following statements about internal control is not correct? a. It guarantees the management will behave ethically. b. It helps protect against the theft of assets. c. It enhances the reliability of accounting information. d. It promotes efficient and effective operations.

A

If a company hires an auditor to check that the work done by others within the company is supported by documentation, it is doing so under the principle of control activities referred to as: A) independent verification. B) segregation of duties. C) restrict access. D) document procedures.

A

If a company hires an auditor to check that the work done by others within the company is supported by documentation, it is doing so under the principle of control activities referred to as: a. independent verification. b. segregation of duties. c. restrict access. d. document procedures.

A

Protecting against theft of assets and enhancing accounting information is the objective of: A) internal controls. B) government regulations. C) loan covenants. D) the external auditors.

A

The Sarbanes-Oxley Act (SOX) requires the establishment of an audit committee that includes the: a. independent directors. b. president of the company. c. chief financial officer of the company. d. companys external auditors.

A

The use of sequentially numbered checks is an example of: a. document procedures. b. establishment of responsibility. c. segregation of duties. d. independent verification.

A

Which of the following is not a change introduced by the Sarbanes-Oxley Act? a. Publicly traded companies must have their financial statements audited twice. b. Management evaluate and report on the effectiveness of internal control over financial reporting. c. Auditors must audit the internal controls of certain companies. d. Public companies must have tip lines that allow employees to secretly submit concerns about questionable accounting or auditing practices.

A