LSU Chapter 10

Which of the following procedures is most likely to prevent the improper disposition of equipment? Select one: A. a separation of duties between those authorized to dispose of equipment and those authorized to approve removal work orders B. the use of serial numbers to identify equipment that could be sold C. periodic comparison of removal work orders to authorizing documentation D. a periodic analysis of the scrap sales and the repairs and maintenance accounts

A. A separation of duties between those authorized to dispose of equipment and those authorized to approve removal work orders

Which of the following is an internal accounting control weakness related to factory equipment? Select one: A. Checks issued in payment of purchases of equipment are not signed by the controller. B. All purchases of factory equipment are required to be made by the department in need of the equipment. C. Factory equipment replacements generally are made when estimated useful lives, as indicated in depreciation schedules, have expired. D. Proceeds from sales of fully depreciated equipment are credited to other income.

B. All purchases of factory equipment are required to be made by the department in need of the equipment

Which of the following internal accounting control procedures could best prevent direct labor from being charged to manufacturing overhead? Select one: A. reconciliation of WIP inventory with cost records B. comparison of daily journal entries with the factory labor summary C. comparison of periodic cost budgets and time cards D. reconciliation of unfinished job summary and production cost records

B. Comparison of daily journal entries with the factory labor summary

If preparation of a periodic scrap report is essential in order to maintain adequate control over the manufacturing process, the data for this report should be accumulated in the: Select one: A. accounting department B. production department C. warehousing department D. budget department.

B. Production department

Which of the following is a question the auditor would expect to find on the production cycle section of an internal accounting control questionnaire? Select one: A. Are vendors' invoices for raw materials approved for payment by an employee who is independent of the cash disbursements function? B. Are signed checks for the purchase of raw materials mailed directly after signing without being returned to the person who authorized the invoice processing? C. Are all releases by storekeepers of raw materials from storage based on approved requisition documents? D. Are details of individual disbursements for raw materials balanced with the total to be posted to the appropriate general ledger account?

C. Are all releases by storekeepers of raw materials from storage based on approved requisition documents?

Which of the following control procedures would most likely be used to maintain accurate perpetual inventory records? Select one: A. independent storeroom count of goods received B. periodic independent reconciliation of control and subsidiary records C. periodic independent comparison of records with goods on hand D. independent matching of purchase orders, receiving reports, and vendors' invoices

C. Periodic independent comparison of records with goods on hand

A well-functioning system of internal control over the inventory/production functions would provide that finished goods are to be accepted for stock only after presentation of a completed production order and a(n): Select one: A. shipping order B. materials requisition C. bill of lading D. inspection report.

D. Inspection report