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1. A firm’s internal control environment is influenced by (Points : 2)

Management’s operating style. organizational structure. personnel policies. all of these.

Question 2.2. The Sarbanes-Oxley Act of 2002 requires companies and their independent accountants to (Points : 2)

report on the financial activities of the company. report on any fraud and theft detected in the company. report on the state of the economy and likelihood of fraud. report on the effectiveness of the company’s internal controls.

Question 3.3. A minimum cash balance required by a bank is called (Points : 2)

cash in bank. cash equivalent. compensating balance. EFT.

Question 4.4. The objectives of internal control are to (Points : 2)

control the internal organization of the accounting department personnel and equipment. provide reasonable assurance that assets are safeguarded, information is processed accurately, and laws and regulations are complied with. prevent fraud and promote the social interest of the company. provide control over “internal-use only” reports and employee internal conduct.

Question 5.5. A bank reconciliation should be prepared periodically because (Points : 2)

the depositor’s records and the bank’s records are in agreement. the bank has not recorded all of its transactions. any differences between the depositor’s records and the bank’s records should be determined, and any errors made by either party should be discovered and corrected. the bank must make sure that its records are correct.

Question 6.6. The framework that has become widely accepted as the standard by which companies design, analyze, and evaluate internal controls is the (Points : 2)

Internal Control Integrated Framework by the Committee of Sponsoring Organizations. Internal Control Integrated Framework by the Congress of Special Offering. Internal Control Localized Structure by the Committee of Sponsoring Organizations. Internal Control Localized Structure by the Congress of Special Offerings.

Question 7.7. An element of internal control is (Points : 2)

risk assessment. journals. subsidiary ledgers. controlling accounts.

Question 8.8. Which of the following is NOT defined as cash? (Points : 2)

Coins Checks Money orders Commercial paper

Question 9.9. Which of the following elements of internal control focuses upon locating weaknesses and improving control effectiveness? (Points : 2)

The control environment Risk assessment Control procedures Monitoring

Question 10.10. Requiring employees to take annual vacations is part of which element of internal control? (Points : 2)

The control environment Risk assessment Control procedures Monitoring