Chapter 8 quiz example #7748

12 June 2024
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question
Which of the following is true of internal‚Äč control?
answer
One of the major purposes of internal control is to ensure that the assets are safeguarded.
question
Which of the following describes the risk assessment component of internal‚Äč control?
answer
A company must identify its risks and take necessary steps to minimize them.
question
External auditors evaluate company controls to ensure the financial statements are presented‚Äč fairly, in accordance with Generally Accepted Accounting Principles.
answer
True
question
When recording credit card or debit card sales using the net‚Äč method,
answer
cash received equals sales minus the fee assessed by the card processing company.
question
Which of the following is an attribute of the internal control procedure-assignment of‚Äč responsibilities?
answer
Each position has clearly assigned responsibilities.
question
Two or more people working together to circumvent internal controls and defraud a company is known as‚Äč ________.
answer
collusion
question
Which of the following items would require an adjusting entry after preparation of the bank‚Äč reconciliation?
answer
errors made on the books revealed by the bank reconciliation
question
Before any internal control procedure is‚Äč initiated, which of the following questions must be primarily addressed by a‚Äč company?
answer
How much benefit will be derived from the cost of the‚Äč procedure?
question
Internal auditors are employees of the business who ensure that employees are following company policies and that operations are running efficiently.
answer
True
question
Which of the following describes the environment in internal‚Äč control?
answer
The environment is the‚Äč "tone at the‚Äč top" of the business.
question
Which of the following is a requirement of the‚Äč Sarbanes-Oxley Act?
answer
An outside auditor must evaluate the‚Äč client's internal controls and report on the internal controls as part of the audit report.
question
At Radiant‚Äč Company, the sales department is also responsible for recording cash transactions as it does not have a separate accounting department. Which internal control procedure needs‚Äč strengthening?
answer
separation of duties
question
Which one of the following is true of the bank‚Äč reconciliation?
answer
It should not be prepared by an employee who handles cash transactions.
question
Regarding the gross method of handling credit and debit card‚Äč transactions, which of the following statements is‚Äč correct?
answer
The processing fees for all transactions processed for the month are deducted from the‚Äč company's bank‚Äč account, often on the last day of the month.