1. The concept of reasonable assurance suggests that a. the cost of an internal control should be…

 
   

Need your ASSIGNMENT done? Use our paper writing service to score better and meet your deadlines.  

1. The
concept of reasonable assurance suggests that

a.

the cost of an internal control
should be less than the benefit it provides

b.

a well-designed system of
internal controls will detect all fraudulent activity

c.

the objectives achieved by an
internal control system vary depending on the data processing method

d.

the effectiveness of internal
controls is a function of the industry environment

2. Which
of the following is not a limitation of the internal control system?

a.

errors are made due to employee
fatigue

b.

fraud occurs because of
collusion between two employees

c.

the industry is inherently
risky

d.

management instructs the bookkeeper
to make fraudulent journal entries

3. The
most cost-effective type of internal control is

a.

preventive control

b.

accounting control

c.

detective control

d.

corrective control

4. Which
of the following is a preventive control?

a.

credit check before approving a
sale on account

b.

bank reconciliation

c.

physical inventory count

d.

comparing the accounts
receivable subsidiary ledger to the control account

5. A
well-designed purchase order is an example of a

a.

preventive control

b.

detective control

c.

corrective control

d.

none of the above

6. A
physical inventory count is an example of a

a.

preventive control

b.

detective control

c.

corrective control

d.

Feed-forward control

7. The
bank reconciliation uncovered a transposition error in the books. This is an
example of a

a.

preventive control

b.

detective control

c.

corrective control

d.

none of the above

8. Which
of the following is not an element of the internal control environment?

a.

management philosophy and
operating style

b.

organizational structure of the
firm

c.

well-designed documents and
records

d.

the functioning of the board of
directors and the audit committee