Question 1

Regarding COBIT,which of the following statements is true?

Accepted Answer

A) COBIT means Cost Objectives for Information and Related Technology 
B) COBIT rejects the definition of internal control from the COSO report 
C) COBIT states that a company's management should play a minor role in establishing an internal control system 
D) COBIT classifies people as one of the primary resources managed by various IT processes 
A) COBIT means Cost Objectives for Information and Related Technology 
B) COBIT rejects the definition of internal control from the COSO report 
C) COBIT states that a company's management should play a minor role in establishing an internal control system 
D) COBIT classifies people as one of the primary resources managed by various IT processes D

Question 2

Control procedures that are designed to remedy problems discovered through detective controls are called:

Accepted Answer

A) Corrective controls 
B) Preventive controls 
C) Before-the-fact controls 
D) Management-by-exception controls 
A) Corrective controls 
B) Preventive controls 
C) Before-the-fact controls 
D) Management-by-exception controls A

Question 3

A responsibility that should be assigned to a specific employee and not shared is that of:

Accepted Answer

A) Access to the company's safe deposit box 
B) Placing orders and maintaining relationships with a prime supplier 
C) Attempting to collect a particular delinquent account 
D) Custodianship of the petty cash fund 
A) Access to the company's safe deposit box 
B) Placing orders and maintaining relationships with a prime supplier 
C) Attempting to collect a particular delinquent account 
D) Custodianship of the petty cash fund C

Question 4

Which one of the following functions performed in an organization is a violation of internal control?

Accepted Answer

A) A mail clerk opening the mail compares the check received with the source document accompanying the payment,noting the amount paid,then forwards the checks daily (along with a listing of the cash receipts)to the Cashier for deposit 
B) A mail clerk opening the mail compares the check received with the source document accompanying the payment,noting the amount paid,then forwards the source documents that accompany the payments (along with a listing of the cash receipts)to Accounts Receivable,on a daily basis,for posting to the subsidiary ledger 
C) At the end of the week the Cashier prepares a deposit slip for all of the cash receipts received during the week 
D)  The General Ledger clerk compares the summary journal entry,received from the Cashier for cash receipts applicable to outstanding accounts,with the batch total for posting to the Subsidiary Ledger by the Accounts Receivable clerk 
A) A mail clerk opening the mail compares the check received with the source document accompanying the payment,noting the amount paid,then forwards the checks daily (along with a listing of the cash receipts)to the Cashier for deposit 
B) A mail clerk opening the mail compares the check received with the source document accompanying the payment,noting the amount paid,then forwards the source documents that accompany the payments (along with a listing of the cash receipts)to Accounts Receivable,on a daily basis,for posting to the subsidiary ledger 
C) At the end of the week the Cashier prepares a deposit slip for all of the cash receipts received during the week 
D)  The General Ledger clerk compares the summary journal entry,received from the Cashier for cash receipts applicable to outstanding accounts,with the batch total for posting to the Subsidiary Ledger by the Accounts Receivable clerk

Question 5

An effective approach for maintaining a good audit trail for cash disbursements is to utilize a voucher system with coins and currency issued for each disbursement.

Accepted Answer

A) True 
 B)False

Question 6

For control purposes,the quantities of materials ordered may be omitted from the copy of the purchase order which is:

Accepted Answer

A) Forwarded to the accounting department 
B) Retained in the purchasing department's files 
C) Returned to the requisitioner 
D) Forwarded to the receiving department 
A) Forwarded to the accounting department 
B) Retained in the purchasing department's files 
C) Returned to the requisitioner 
D) Forwarded to the receiving department

Question 7

The COSO report failed to define internal control.

Accepted Answer

A) True 
 B)False

Question 8

Regarding a company's audit trail,which of the following statements is true?

Accepted Answer

A) Because of the complexities involved in establishing an audit trail,a good audit trail normally makes it more difficult for an individual to follow the flow of a company's business transactions through the company's information system 
B) In actuality,the audit trail established within a company's information system is an unimportant element of the company's internal control system 
C) When a company's audit trail becomes more difficult to follow,this causes an increase in the risk of errors or irregularities taking place in the processing of accounting transactions and not being detected 
D) A company's policies and procedures manual should not be part of its audit trail since confidential information is included within this manual 
A) Because of the complexities involved in establishing an audit trail,a good audit trail normally makes it more difficult for an individual to follow the flow of a company's business transactions through the company's information system 
B) In actuality,the audit trail established within a company's information system is an unimportant element of the company's internal control system 
C) When a company's audit trail becomes more difficult to follow,this causes an increase in the risk of errors or irregularities taking place in the processing of accounting transactions and not being detected 
D) A company's policies and procedures manual should not be part of its audit trail since confidential information is included within this manual

Question 9

At a movie?theater box office,all tickets are prenumbered.At the end of each day,the beginning ticket number is subtracted from the ending number to give the number of tickets sold.Cash is counted and compared with the number of tickets sold.

Accepted Answer

A) The box office gives too much change 
B) The ticket taker admits his friends without a ticket 
C) The manager gives theater passes for personal expenses,which is against company policy 
D) A test check of customers entering the theater does not reconcile with ticket sales 
E) Tickets from a previous day are discovered in the ticket taker's stub box despite the fact that tickets are stamped "Good on Date of Purchase Only" 
A) The box office gives too much change 
B) The ticket taker admits his friends without a ticket 
C) The manager gives theater passes for personal expenses,which is against company policy 
D) A test check of customers entering the theater does not reconcile with ticket sales 
E) Tickets from a previous day are discovered in the ticket taker's stub box despite the fact that tickets are stamped "Good on Date of Purchase Only"

Question 10

Which of the following control procedures provides physical protection for a company's cash asset?

Accepted Answer

A) Majority of authorized cash disbursements made by check 
B) Daily cash receipts deposited intact at bank 
C) Voucher system for cash disbursements 
D) all of the above 
A) Majority of authorized cash disbursements made by check 
B) Daily cash receipts deposited intact at bank 
C) Voucher system for cash disbursements 
D) all of the above

Question 11

The preventive controls within a company's internal control system:

Accepted Answer

A) Form the foundation for all of a company's other internal control components 
B) Focus on management's philosophy and operating style 
C) Ignore the risk factor associated with a company's control procedures 
D) Are controls put by the management to prevent problems from occurring 
A) Form the foundation for all of a company's other internal control components 
B) Focus on management's philosophy and operating style 
C) Ignore the risk factor associated with a company's control procedures 
D) Are controls put by the management to prevent problems from occurring

Question 12

The 1992 COSO report identifies five components for an effective internal control system.Which of those five includes the methods used to inform employees about their roles and responsibilities pertaining to internal control?

Accepted Answer

A) Control procedures 
B) Control environment 
C) Control activities 
D) Information and communication 
A) Control procedures 
B) Control environment 
C) Control activities 
D) Information and communication

Question 13

Many organizations have an internal audit function that makes periodic reviews of each department within the organization.The focus of these reviews is to:

Accepted Answer

A) Conduct an investigation of each department to be sure fraud is not taking place 
B) Evaluate the efficiency and effectiveness of the department 
C) Evaluate the performance of the manager of the department 
D) Report to the organization's top managers and board of directors 
A) Conduct an investigation of each department to be sure fraud is not taking place 
B) Evaluate the efficiency and effectiveness of the department 
C) Evaluate the performance of the manager of the department 
D) Report to the organization's top managers and board of directors

Question 14

The personnel subsystem has the important function of matching job qualifications to people qualifications.

Accepted Answer

A) True 
 B)False

Question 15

Regarding the internal audit function,which of the following statements is true?

Accepted Answer

A) Since many internal auditors have accounting backgrounds,the internal audit function should ideally be included within a company's accounting subsystem 
B) It is not proper for internal auditors to perform a fraud investigation within any part of their company's system 
C) Because of the independence of external auditors,they should never accept previous work of evaluating controls performed by a company's internal auditors 
D) Within a company's system,it is preferable to establish the internal audit function as a separate subsystem 
A) Since many internal auditors have accounting backgrounds,the internal audit function should ideally be included within a company's accounting subsystem 
B) It is not proper for internal auditors to perform a fraud investigation within any part of their company's system 
C) Because of the independence of external auditors,they should never accept previous work of evaluating controls performed by a company's internal auditors 
D) Within a company's system,it is preferable to establish the internal audit function as a separate subsystem

Question 16

An approach used by many companies to reduce the risk of loss caused by the theft of assets by employees is to:

Accepted Answer

A) Utilize polygraphs 
B) Acquire arbitrage loss protection 
C) Acquire fidelity bond coverage 
D) Institute punitive management 
A) Utilize polygraphs 
B) Acquire arbitrage loss protection 
C) Acquire fidelity bond coverage 
D) Institute punitive management

Question 17

Which of the following statements is true regarding preventive control procedures and detective control procedures?

Accepted Answer

A) They should be interrelated 
B) If preventive controls exist,detective controls are unnecessary 
C) If detective controls exist,preventive controls are unnecessary 
D) Preventive controls should be cost effective,but detective controls do not need to be cost effective 
A) They should be interrelated 
B) If preventive controls exist,detective controls are unnecessary 
C) If detective controls exist,preventive controls are unnecessary 
D) Preventive controls should be cost effective,but detective controls do not need to be cost effective

Question 18

When assessing a company's internal control structure policies and procedures,the primary consideration is whether they

Accepted Answer

A) Prevent management override 
B) Relate to the control environment 
C) Reflect management's philosophy and operating style 
D)  Affect the financial statement assertions 
A) Prevent management override 
B) Relate to the control environment 
C) Reflect management's philosophy and operating style 
D)  Affect the financial statement assertions

Question 19

Controls that attempt to safeguard asset resources are often called detective controls.

Accepted Answer

A) True 
 B)False

Question 20

A control procedure that may be established within the sales department of a company's marketing subsystem is the addition of the sales invoice amounts before these invoices are sent to the information processing subsystem.This control total of invoice amounts is called a:

Accepted Answer

A) Checksum 
B) Random total check 
C) Redundant control amount 
D) Batch control total 
A) Checksum 
B) Random total check 
C) Redundant control amount 
D) Batch control total

Regarding COBIT,which of the following statements is true?

Control procedures that are designed to remedy problems discovered through detective controls are called:

A responsibility that should be assigned to a specific employee and not shared is that of:

Which one of the following functions performed in an organization is a violation of internal control?

An effective approach for maintaining a good audit trail for cash disbursements is to utilize a voucher system with coins and currency issued for each disbursement.

For control purposes,the quantities of materials ordered may be omitted from the copy of the purchase order which is:

The COSO report failed to define internal control.

Regarding a company's audit trail,which of the following statements is true?

At a movie?theater box office,all tickets are prenumbered.At the end of each day,the beginning ticket number is subtracted from the ending number to give the number of tickets sold.Cash is counted and compared with the number of tickets sold.

Which of the following control procedures provides physical protection for a company's cash asset?

The preventive controls within a company's internal control system:

The 1992 COSO report identifies five components for an effective internal control system.Which of those five includes the methods used to inform employees about their roles and responsibilities pertaining to internal control?

Many organizations have an internal audit function that makes periodic reviews of each department within the organization.The focus of these reviews is to:

The personnel subsystem has the important function of matching job qualifications to people qualifications.

Regarding the internal audit function,which of the following statements is true?

An approach used by many companies to reduce the risk of loss caused by the theft of assets by employees is to:

Which of the following statements is true regarding preventive control procedures and detective control procedures?

When assessing a company's internal control structure policies and procedures,the primary consideration is whether they

Controls that attempt to safeguard asset resources are often called detective controls.

A control procedure that may be established within the sales department of a company's marketing subsystem is the addition of the sales invoice amounts before these invoices are sent to the information processing subsystem.This control total of invoice amounts is called a:

Accounting Information Systems and the Accountant

Information Technology and Aiss

Data Modeling

Organizing and Manipulating the Data in Databases

Database Forms and Reports

Documenting Accounting Information Systems

Documenting Accounting Information Systems

Accounting Information Systems and Business Processes: Part II

Computer Controls for Organizations and Accounting Information Systems

Computer Crime,fraud,ethics,and Privacy

Information Technology Auditing

Developing and Implementing Effective Accounting Information Systems

Accounting on the Internet

Accounting on the Internet

Filters

Exam 9: Introduction to Internal Control Systems

Regarding COBIT,which of the following statements is true?

Control procedures that are designed to remedy problems discovered through detective controls are called:

A responsibility that should be assigned to a specific employee and not shared is that of:

Which one of the following functions performed in an organization is a violation of internal control?

An effective approach for maintaining a good audit trail for cash disbursements is to utilize a voucher system with coins and currency issued for each disbursement.

For control purposes,the quantities of materials ordered may be omitted from the copy of the purchase order which is:

The COSO report failed to define internal control.

Regarding a company's audit trail,which of the following statements is true?

At a movie?theater box office,all tickets are prenumbered.At the end of each day,the beginning ticket number is subtracted from the ending number to give the number of tickets sold.Cash is counted and compared with the number of tickets sold.

Which of the following control procedures provides physical protection for a company's cash asset?

The preventive controls within a company's internal control system:

The 1992 COSO report identifies five components for an effective internal control system.Which of those five includes the methods used to inform employees about their roles and responsibilities pertaining to internal control?

Many organizations have an internal audit function that makes periodic reviews of each department within the organization.The focus of these reviews is to:

The personnel subsystem has the important function of matching job qualifications to people qualifications.

Regarding the internal audit function,which of the following statements is true?

An approach used by many companies to reduce the risk of loss caused by the theft of assets by employees is to:

Which of the following statements is true regarding preventive control procedures and detective control procedures?

When assessing a company's internal control structure policies and procedures,the primary consideration is whether they

Controls that attempt to safeguard asset resources are often called detective controls.

A control procedure that may be established within the sales department of a company's marketing subsystem is the addition of the sales invoice amounts before these invoices are sent to the information processing subsystem.This control total of invoice amounts is called a:

Accounting Information Systems and the Accountant

Information Technology and Aiss

Data Modeling

Organizing and Manipulating the Data in Databases

Database Forms and Reports

Documenting Accounting Information Systems

Documenting Accounting Information Systems

Accounting Information Systems and Business Processes: Part II

Computer Controls for Organizations and Accounting Information Systems

Computer Crime,fraud,ethics,and Privacy

Information Technology Auditing

Developing and Implementing Effective Accounting Information Systems

Accounting on the Internet

Accounting on the Internet

Filters