chapter 6 smartbook

Human (error/fraud) is related to misjudgment or confusion. Human (error/fraud) involves intent to defeat internal controls for personal gain.

Blank 1: error Blank 2: fraud

Summarize the internal control principle of establishing responsibility by completing the following sentence. Proper internal control means that responsibility for a (task/shortage/sale) is clearly (posted/established/compensated) and assigned to one person.

Blank 1: task Blank 2: established

What is the purpose of internal controls?

Companies create internal controls to protect assets and ensure reliable accounting.

Identify the basic internal control guidelines which should be in place to protect a business's cash by selecting the correct answers below

Handling cash is separate from recordkeeping of cash. Cash payments are made by check. Cash receipts are promptly deposited in a bank.

Summarize the internal control procedure of maintaining adequate records by selecting the correct answers below

Keeping detailed records makes it unlikely that assets are lost or stolen without detection. Reliable records are a source of information that managers use to monitor activities.

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

Liquid assets must be available to pay current liabilities.

Which of the following are principles of internal control?

Maintain adequate records. Divide responsibility for related transactions. Perform regular and independent reviews. Establish responsibilities.

Identify the principles of internal control by selecting the correct answers below.

Perform regular and independent reviews. Apply technological controls. Establish responsibilities. Insure assets. Separate recordkeeping from custody of assets. Maintain adequate records

Identify which of the items below are goals of good cash management

Plan cash receipts to meet cash payments when due. Keep a minimum level of cash necessary to operate.

Summarize the internal control procedure of maintaining adequate records by selecting the correct answers below.

Reliable records are a source of information that managers use to monitor activities. Keeping detailed records makes it unlikely that assets are lost or stolen without detection.

A good internal control to protect cash is to make cash payments using

checks

Good recordkeeping helps protect assets and helps managers

monitor company activities

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

more extensive testing of records separation of duties new evidence of processing reduced processing errors

Responsibility for a task should be clearly established and assigned to

one person

The triple threat of fraud involves:

pressure, opportunity, rationalization

Which of the following are correct regarding why management uses internal controls?

protect assets. uphold company policies. ensure reliable accounting. promote efficient operations.

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

separation of duties reduced processing errors new evidence of processing more extensive testing of records

Which of the statements below explains how technology has impacted internal control systems?

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