TEST MCQ SKILLS | A Place to test Your Knowledge

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

ethics

justifiable reliance

situational pressure

opportunity

Correct! Wrong!

The underlying assumption of reasonable assurance regarding implementation of internal control means that :

auditor is reasonably assured that fraud has not occurred in the period.

auditors are reasonably assured that employee carelessness can weaken an internal control structure.

implementation of the control procedure should not have a significant adverse effect on efficiency or profitability.

management assertions about control effectiveness should provide auditors with reasonable assurance.

a control applies reasonably well to all forms of computer technology.

Correct! Wrong!

Which of the following situations is NOT a segregation of duties violation?

The treasurer has the authority to sign checks but gives the signature block to the assistant treasurer to run the check-signing machine.

The warehouse clerk, who has custodial responsibility over inventory in the warehouse, selects the vendor and authorizes purchases when inventories are low.

The sales manager has the responsibility to approve credit and the authority to write off accounts.

The department time clerk is given the undistributed payroll checks to mail to absent employees.

The accounting clerk who shares the recordkeeping responsibility for the accounts receivable subsidiary ledger performs the monthly reconciliation of the subsidiary ledger and the control account.

Correct! Wrong!

Which of the following controls would best prevent the lapping of accounts receivable?

Segregate duties so that the clerk responsible for recording in the accounts receivable subsidiary ledger has no access to the general ledger.

Request that customers review their monthly statements and report any unrecorded cash payments.

Require customers to send payments directly to the company’s bank.

Request that customers make checks payable to the company.

Correct! Wrong!

To conceal the theft of cash receipts from customers in payment of their accounts, which of the following journal entries should the bookkeeper make?

Miscellaneous Expense DR Cash CR

Petty Cash DR Cash CR

Cash DR Accounts Receivable CR

Sales Returns DR Accounts Receivable CR

None of the above

Correct! Wrong!

Ensuring that all material transactions processed by the information system are valid and in accordance with management’s objectives is an example of :

transaction authorization

supervision.

accounting records.

independent verification.

Correct! Wrong!

The fraud scheme that is similar to the ‘‘borrowing from Peter to pay Paul’’ scheme is :

expense account fraud

bribery

lapping.

transaction fraud.

Correct! Wrong!

Providing timely information about transactions in sufficient detail to permit proper classification and financial reporting is an example of:

the control environment.

risk assessment.

information and communication

monitoring.

Correct! Wrong!

Management can expect various benefits to follow from implementing a system of strong internal control. Which of the following benefits is least likely to occur?

reduction of cost of an external audit

prevention of employee collusion to commit fraud

availability of reliable data for decision-making purposes

some assurance of compliance with the Foreign Corrupt Practices Act of 1977

some assurance that important documents and records are protected

Correct! Wrong!

Which of the following is often called a compensating control?

transaction authorization

supervision

accounting records

independent verification

Correct! Wrong!

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

The underlying assumption of reasonable assurance regarding implementation of internal control means that :

Which of the following situations is NOT a segregation of duties violation?

Which of the following controls would best prevent the lapping of accounts receivable?

To conceal the theft of cash receipts from customers in payment of their accounts, which of the following journal entries should the bookkeeper make?

Ensuring that all material transactions processed by the information system are valid and in accordance with management’s objectives is an example of :

The fraud scheme that is similar to the ‘‘borrowing from Peter to pay Paul’’ scheme is :

Providing timely information about transactions in sufficient detail to permit proper classification and financial reporting is an example of:

Management can expect various benefits to follow from implementing a system of strong internal control. Which of the following benefits is least likely to occur?

Which of the following is often called a compensating control?

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