ACC 131 Exam 2 Multiple Choice Review - Charles Thomas
Questions And Correct Answers
What is the primary role of internal controls in managing a business? - ANSWER To
constrain subordinates' activities in order to prevent employees from deviating from the
scope of their responsibilities and encouraging them to act in the best interest of the
business
Which of the following is not one of the three areas for which internal control systems
are intended to provide reasonable assurance?
Reliability of financial reporting
Compliance with applicable laws and regulations
Effectiveness and efficiency of operations
Certification that the financial statements are without error - ANSWER Certification that
the financial statements are without error
Which of the following is not one of the five components of internal control?
Analysis of control procedures
Information and communication
Risk assessment
Control environment - ANSWER Analysis of control procedures
Which of the following is not one of the five categories of control activities?
Checks on recorded amounts
Defalcation and financial reporting
Clearly defined authority and responsibility
Segregation of duties - ANSWER Defalcation and financial reporting
The internal audit function is part of what element of the internal control system? -
, ANSWER Monitoring
Which of the following is not generally an internal control activity?
Establishing clear lines of authority to carry out specific tasks
Physically counting inventory in a perpetual inventory system
Reducing the cost of hiring seasonal employees
Limiting access to computerized accounting records - ANSWER Reducing the cost of
hiring seasonal employees
Allowing only certain employees to order goods and services for the company is an
example of what internal control procedure? - ANSWER Clearly defined authority and
responsibility
Deposits made by a company but not yet reflected in a bank statement are called -
ANSWER deposits in transit.
Which one of the following would not appear on a bank statement for a checking
account?
Deposits
Interest earned
Service charges
Outstanding checks - ANSWER Outstanding checks
Which one of the following is not a cash equivalent?
180-day note issued by a local or state government
90-day U.S. Treasury bill
60-day corporate commercial paper
Questions And Correct Answers
What is the primary role of internal controls in managing a business? - ANSWER To
constrain subordinates' activities in order to prevent employees from deviating from the
scope of their responsibilities and encouraging them to act in the best interest of the
business
Which of the following is not one of the three areas for which internal control systems
are intended to provide reasonable assurance?
Reliability of financial reporting
Compliance with applicable laws and regulations
Effectiveness and efficiency of operations
Certification that the financial statements are without error - ANSWER Certification that
the financial statements are without error
Which of the following is not one of the five components of internal control?
Analysis of control procedures
Information and communication
Risk assessment
Control environment - ANSWER Analysis of control procedures
Which of the following is not one of the five categories of control activities?
Checks on recorded amounts
Defalcation and financial reporting
Clearly defined authority and responsibility
Segregation of duties - ANSWER Defalcation and financial reporting
The internal audit function is part of what element of the internal control system? -
, ANSWER Monitoring
Which of the following is not generally an internal control activity?
Establishing clear lines of authority to carry out specific tasks
Physically counting inventory in a perpetual inventory system
Reducing the cost of hiring seasonal employees
Limiting access to computerized accounting records - ANSWER Reducing the cost of
hiring seasonal employees
Allowing only certain employees to order goods and services for the company is an
example of what internal control procedure? - ANSWER Clearly defined authority and
responsibility
Deposits made by a company but not yet reflected in a bank statement are called -
ANSWER deposits in transit.
Which one of the following would not appear on a bank statement for a checking
account?
Deposits
Interest earned
Service charges
Outstanding checks - ANSWER Outstanding checks
Which one of the following is not a cash equivalent?
180-day note issued by a local or state government
90-day U.S. Treasury bill
60-day corporate commercial paper
