ACC 121 cash, fraud, internal control

Identify the principles of internal control by selecting the correct answers below. (Check all that apply.)

1- Insure assets. 2- Establish responsibilities. 3- Perform regular and independent reviews. 4- Apply technological controls. 5- Maintain adequate records. 6- Separate record keeping from custody of assets.

Describe the purpose of a purchase requisition by selecting the correct answer below. (Check all that apply.)

1- Purchase requisitions are used to inform the purchasing department of its needs. 2- Purchase requisitions are used for control purposes. 3- Managers are not allowed to place orders directly with vendors; instead, they fill out a purchase requisition.

Which of the statements below explains how technology has impacted internal control systems? (Check all that apply.)

1- Technologically advanced systems can record who made entries, the date and time of the entry and the source of the entry. 2- Technology has encouraged the growth of e-commerce, which means that there is a higher risk of credit card number theft. 3- Technology has reduced the number of processing errors.

Auditors focus more on testing the __1__ of a company's blockchain processes and technology than on verifying the _2__ of its output.

1- effectiveness 2- accuracy

Each of the following are types of technological impacts related to internal control:

1- reduced processing errors 2- new evidence of processing 3- more extensive testing of records 4- separation of duties

Which of the following are correct regarding why management uses internal controls? (Check all that apply.)

1- uphold company policies. 2- promote efficient operations. 3- protect assets. 4- ensure reliable accounting.

A bank reconciliation proves the accuracy of the depositor's and the bank's records. The bank statement balance is adjusted for items such as outstanding checks and unrecorded deposits made on or before the bank statement date but not reflected on the statement. The book balance is adjusted for items such as service charges, bank collections for the depositor, and interest earned on the account. Select the items below which must be adjusted to the book balance:

- book error - interest earned on checking account - collections of accounts receivable by the bank

The triple threat of fraud involves:

opportunity, pressure, rationalization

All of the following describe blockchain:

1- blockchain is continuously and simultaneously updated and verified 2- blockchain makes it more difficult for the ledger to be modified

Which statement below explains why liquid assets are needed in a business?

Liquid assets must be available to pay current liabilities.

The following annual account balances are taken from ABC Co at year end. Current Year 1 Year Ago Accounts Receivable $49,500 $48,000 Net Sales $580,000 $535,000 Days Sales Uncollected 31.15 days 32.74 days Select the statements below that are correct regarding ABC Co.'s ability to collect its receivables from customers.

1- ABC Co. is shortening the amount of time that money is tied up in receivables. 2- ABC Co. has shortened the amount of time it takes to collect receivables from customers. 3- ABC Co. took approximately 31 days to collect cash from its credit customers in the current year.

Determine which of the items below would show up on a monthly bank statement. (Check all that apply.)

1- End-of-period balance in the account 2- Beginning-of-period balance in the account 3- Withdrawals and other decreases to the account during the period 4- Deposits and other increases to the account during the period

Internal control policies and procedures have limitations that arise from many elements. Match the limitation on the left with its definition on the right.

1. Human error = Can occur from carelessness, misjudgment or confusion 2. Human fraud = Involves intent by people to defeat internal controls for personal gain 3. Cost-benefit principle = Dictates that the costs of internal controls must not exceed their benefits 4. Internal control environment = Management must convey commitment to internal control policies and procedures

Define what liquidity means by completing the following sentence. Liquidity refers to a company's ability to pay for its _____________ liabilities.

current