FAR — Financial Accounting & Reporting — Quiz 27

Questions in this quiz (10)

1. Which of the following would most likely indicate strong internal control?

   • One employee performs all accounting duties
   • Regular independent review of financial records
   • Employees have unrestricted system access
   • Transactions recorded without documentation

2. Which internal control component identifies risks that could prevent achieving objectives?

   • Control activities
   • Risk assessment
   • Monitoring
   • Information and communication

3. Which control helps detect unauthorized changes to accounting records?

   • Segregation of duties
   • Authorization procedures
   • Independent verification
   • Risk assessment

4. Which of the following best describes a preventive control?

   • Detects errors after they occur
   • Prevents errors before they occur
   • Summarizes financial data
   • Reviews financial statements

5. What is management's primary responsibility regarding internal controls?

   • Eliminating all risks
   • Designing and maintaining effective internal controls
   • Performing external audits
   • Preparing tax returns

6. Which control best detects errors in accounts receivable?

   • Monitoring
   • Segregation of duties
   • Independent reconciliation of receivable balances
   • Authorization procedures

7. Which control ensures employees follow approved procedures?

   • Authorization procedures
   • Monitoring
   • Segregation of duties
   • Physical safeguards

8. Which situation weakens internal control?

   • Segregation of duties
   • Independent verification
   • One employee handles cash and reconciles accounts
   • Physical safeguards

9. Which internal control component reflects ethical values of management?

   • Monitoring
   • Control environment
   • Risk assessment
   • Control activities

10. Which internal control activity evaluates controls periodically?

    • Risk assessment
    • Monitoring
    • Authorization procedures
    • Physical safeguards