CPA Questions Exam 3
Operating control of the check-signing machine normally should be the responsibility of the :
a. general accounting function
b. treasury function
c. legal counsel
d. internal audit function ✔✔b. treasury function
Internal control over cash receipts is weakened when an employee who receives customer mail
receipts also:
a. prepares initial cash receipts records
b. records credits to individual accounts receivable
c. prepares bank deposit slips for all mail receipts
d. maintains a petty cash fund ✔✔b. records credits to individual accounts receivable
3. The authorization for the write-off of accounts receivable should be the responsibility of the:
a. credit manager
b. controller
c. accounts receivable clerk
d. treasurer ✔✔d. treasurer
4. For good internal control, which of the following functions should not be the responsibility of
the treasurer's department?
a. data processing
b. handling of cash
c. custody of securities
d. establishment of credit policies ✔✔a. data processing
5. Which of the following statements about internal control structure is correct?
a. a properly maintained internal control process reasonably ensures that collusion among
employees cannot occur
b. the establishment and maintenance of the internal control structure is an important
responsibility of the internal auditor
c. an exceptionally strong internal control structure is enough for the auditor to eliminate
substantive tests on a significant account balance
, d. the cost/benefit relationship is a primary criterion that should be considered in designing an
internal control structure ✔✔d. the cost/benefit relationship is a primary criterion that should
be considered in designing an internal control structure
6. For effective internal accounting control, employees maintaining the accounts receivable
subsidiary ledger should not also approve:
a. employee overtime wages
b. credit granted to customers
c. write-offs of customer accounts
d. cash disbursements ✔✔c. write-offs of customer accounts
7. Which of the following is an effective internal accounting control over accounts receivable?
a. only people who handle cash receipts should be responsible for preparing documents that
reduce accounts receivable balances
b. responsibility for approval of the write-off of uncollectible accounts receivable should be
assigned to the cashier
c. balances in the subsidiary accounts receivable ledger should be reconciled to the general
ledger control account once a year, preferably at year end
d. the billing function should be assigned to people other than those responsible for
maintaining accounts receivable subsidiary records ✔✔d. the billing function should be
assigned to people other than those responsible for maintaining accounts receivable subsidiary
records
8. A company policy should clearly indicate that defective merchandise returned by
customers is to be delivered to the:
a. sales clerk
b. receiving clerk
c. inventory control clerk
d. accounts receivable clerk ✔✔b. receiving clerk
9. Which of the following is not a universal rule for achieving strong internal control
over cash?
a. separate the cash handling and record-keeping functions
b. decentralize the receiving of cash as much as possible
c. deposit each day's cash receipts by the end of the day
d. have bank reconciliations performed by employees independent with respect to handling
cash ✔✔b. decentralize the receiving of cash as much as possible
10. Which of the following is an internal control procedure that would prevent a paid
Operating control of the check-signing machine normally should be the responsibility of the :
a. general accounting function
b. treasury function
c. legal counsel
d. internal audit function ✔✔b. treasury function
Internal control over cash receipts is weakened when an employee who receives customer mail
receipts also:
a. prepares initial cash receipts records
b. records credits to individual accounts receivable
c. prepares bank deposit slips for all mail receipts
d. maintains a petty cash fund ✔✔b. records credits to individual accounts receivable
3. The authorization for the write-off of accounts receivable should be the responsibility of the:
a. credit manager
b. controller
c. accounts receivable clerk
d. treasurer ✔✔d. treasurer
4. For good internal control, which of the following functions should not be the responsibility of
the treasurer's department?
a. data processing
b. handling of cash
c. custody of securities
d. establishment of credit policies ✔✔a. data processing
5. Which of the following statements about internal control structure is correct?
a. a properly maintained internal control process reasonably ensures that collusion among
employees cannot occur
b. the establishment and maintenance of the internal control structure is an important
responsibility of the internal auditor
c. an exceptionally strong internal control structure is enough for the auditor to eliminate
substantive tests on a significant account balance
, d. the cost/benefit relationship is a primary criterion that should be considered in designing an
internal control structure ✔✔d. the cost/benefit relationship is a primary criterion that should
be considered in designing an internal control structure
6. For effective internal accounting control, employees maintaining the accounts receivable
subsidiary ledger should not also approve:
a. employee overtime wages
b. credit granted to customers
c. write-offs of customer accounts
d. cash disbursements ✔✔c. write-offs of customer accounts
7. Which of the following is an effective internal accounting control over accounts receivable?
a. only people who handle cash receipts should be responsible for preparing documents that
reduce accounts receivable balances
b. responsibility for approval of the write-off of uncollectible accounts receivable should be
assigned to the cashier
c. balances in the subsidiary accounts receivable ledger should be reconciled to the general
ledger control account once a year, preferably at year end
d. the billing function should be assigned to people other than those responsible for
maintaining accounts receivable subsidiary records ✔✔d. the billing function should be
assigned to people other than those responsible for maintaining accounts receivable subsidiary
records
8. A company policy should clearly indicate that defective merchandise returned by
customers is to be delivered to the:
a. sales clerk
b. receiving clerk
c. inventory control clerk
d. accounts receivable clerk ✔✔b. receiving clerk
9. Which of the following is not a universal rule for achieving strong internal control
over cash?
a. separate the cash handling and record-keeping functions
b. decentralize the receiving of cash as much as possible
c. deposit each day's cash receipts by the end of the day
d. have bank reconciliations performed by employees independent with respect to handling
cash ✔✔b. decentralize the receiving of cash as much as possible
10. Which of the following is an internal control procedure that would prevent a paid
