ACC 290 Week 5 Practice Quiz

Practice Question 01

Internal controls guarantee the accuracy and reliability of the accounting records.

True

False

Practice Question 02

Which of the following is not an element of the fraud triangle?

Financial pressure

Segregation of duties

Opportunity

Rationalization

Practice Question 03

Which one of the following is not a primary component of an internal control system?

Risk assessment

Information and communication

Monitoring

Rationalization

Practice Question 04

Which of the following is a reason why an organization establishes a system for internal control?

To safeguard its assets.

To increase efficiency of operations.

To ensure compliance with laws and regulations.

All of these answer choices are correct.

Practice Question 14

For what purpose are physical controls used in a business?

To deter employee dishonesty.

To enhance the accuracy and reliability of its accounting records and to safeguard its assets.

To prevent fraud.

To produce accurate financial statements.

Practice Question 19

Handly Inc. permits only designated personnel such as cashiers to handle cash receipts. What principle is being applied?

Segregation of duties

Establishment of responsibility

Independent internal verification

Rotation of employees

Practice Question 21

Which internal control principle is most important in a control system for handling cash receipts?

Independent internal verification

Segregation of duties

Physical controls

Documentation procedures

Practice Question 36

Which one of the statements below is true?

Both deposits in transit and outstanding checks are added to the balance per the bank statement during the bank reconciliation process.

Deposits in transit are deducted from the balance per the bank statement, and outstanding checks are added to the balance per the bank statement during the bank reconciliation process.

The deposits in transit are added to the balance per the bank statement, and outstanding checks are deducted from the balance per the bank statement during the bank reconciliation process.

Both deposits in transit and outstanding checks are deducted from the balance per the bank statement during the bank reconciliation process.

Practice Question 37

As used in a bank reconciliation, how are deposits in transit handled?

Added to the bank balance

Deducted from the bank balance

Added to the book balance

Deducted from the book balance

Practice Question 38

Why should a bank reconciliation be prepared?

To explain any difference between the bank deposits and the checks written.

To explain any difference between the depositor’s balance per books and the balance per bank.

To make sure the actual cash balance is the same as the cash received from customers.

To make sure employees have not committed fraud.