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Week 4: Internal Control, Cash, and Receivables - Class Activity

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Week 4: Internal Control, Cash, and Receivables - Class Activity

1. | Which one of the following is not a primary component of an internal control system? A. | Risk assessment | B. | Information and communication | C. | Monitoring | D. | Rationalization | |

2. | Which of the following is not a reason why an organization establishes a system for internal control? A. | To safeguard its assets | B. | To increase efficiency of operations | C. | To ensure compliance with laws and regulations | D. | All of these are reasons why an organization establishes a system for internal control. | |

3. | Which of the following statements is correct? A. | Control is most effective when two or three people are given responsibility for the same task. | B. | The person who has custody of assets should not perform the record keeping for the assets. | C. | The person who has custody of assets should also perform the record keeping for the assets. | D. | It is often a waste of company resources to have an employee perform independent internal verification. | |

4. | Internal auditors A. | are hired by CPA firms to audit business firms. | B. | are employees of the IRS who evaluate the internal controls of companies filing tax returns. | C. | evaluate the system of internal controls for the companies that employ them. | D. | cannot evaluate the system of internal controls of the company that employs them because they are not independent. | |

5. | Segregation of duties reduces the risk of errors and irregularities. A. | True | B. | False | |

6. | Collusion occurs when two or more people are responsible for a single task. A. | True | B. | False | |

7. | Which of the following is not a principle of internal control? A. | Segregation of duties | B. | Documentation procedures | C. | Collusion between employees | D. | Bonding...

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