1. A weak internal control system is which element in the fraud triangle?
a. Opportunity
b. Rationalization
c. Motive
d. Attitude
2. Which of the following items is not true about fraud?
a. It is designed to persuade another party to act in a way that causes injury or damage to
that party.
b. It can cause injury or damage to another party.
c. It is an intentional misrepresentation of facts.
d. Its damages must exceed a threshold of $150,000.
3. Fictitious accounting entries are recorded that cause revenue to be overstated by $5
million for the year; the accounting manager was trying to make the company’s income look
better on the company’s upcoming loan application. This type of fraud is
a. fraudulent financial reporting.
b. GAAP disordering.
c. IFRS misalignment.
d. asset misappropriation.
4. Each of the following represents an internal control procedure except for
a. limited access to both assets and records.
b. compliance monitoring.
c. clear lines of authority and communication.
d. separation of duties.
5. As part of a strong internal control system, which of the following accounting duties
needs to be separated from cash handling?
a. Record keeping
b. Filing
c. Transaction approval
d. Both a and c need to be separated from cash handling.
6. Having a corporate code of ethics that prohibits employees from accepting gifts from
customers or vendors is an example of which component of internal control?
a. Control procedures
b. Information system
c. Control environment
d. Risk assessment
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Chapter 4 Study Guide
