18) Which of the following describes the internal control component
risk assessment?
A) Internal auditors monitor company controls to safeguard assets, and external auditors monitor the controls to ensure that the accounting records are accurate.
B) Risk assessment is the "tone at the top" of the business.
C) A company must identify its risks.
D) Risk assessment is designed to ensure that the business's goals are achieved.
19) Which of the following describes the internal control component
monitoring of controls?
A) Internal auditors monitor company controls to safeguard assets, and external auditors evaluate the controls to ensure that the accounting records are accurate.
B) Monitoring of controls is the "tone at the top" of the business.
C) Monitoring of controls is designed to ensure that the business's goals are achieved.
D) A company must identify its risks.
20) Which of the following describes the internal control procedure
competent, reliable and ethical personnel?
A) The information system is critical.
B) A company must train and supervise high-quality employees.
C) External auditors monitor internal controls.
D) A company purchases burglar alarms.
21) Which of the following describes the internal control procedure
assignment of responsibilities?
A) To validate their accounting records, a company should have an audit by an external accountant.
B) The company should separate the custody of assets from accounting.
C) The external auditors will monitor internal controls.
D) Have clearly assigned responsibilities for each position.
22) Which of the following describes the internal control procedure
separation of duties?
A) Cashiers must not have access to accounting records.
B) External auditors will monitor internal controls.
C) The information system is critical.
D) Prenumber invoices and other documents.
23) Which of the following describes the internal control procedure
documents?
A) Mandatory vacations will improve internal control.
B) Separate the custody of assets from accounting.
C) Prenumber invoices and other documents.
D) A company should purchase a fireproof vault.
24) Which of the following describes the internal control component
information system?
A) Internal auditors monitor company controls to safeguard assets, and external auditors monitor the controls to ensure that the accounting records are accurate.
B) Control procedures are designed to ensure that the business's goals are achieved.
C) Only authorized users have access to various parts of the information system.
D) The information system is the "tone at the top" of the business.
25) In the following situation, which internal control procedure needs strengthening?
Hofstra Services hired a new clerk to keep custody of and maintain all the equipment in the equipment yard. That employee has not yet been adequately trained on the maintenance needs of the equipment.
A) Assignment of responsibilities
B) Competent, reliable, and ethical personnel
C) Separation of duties
D) Documents
26) In the following situation, which internal control procedure needs strengthening?
The controller's duties include approving bank reconciliations, approving general journal entries, hiring administrative staff, and approving various types of administrative expenses. She needs new computer equipment for the accounting office, but there are no guidelines specifying whether she can approve purchases of office equipment.
A) Assignment of responsibilities
B) Competent, reliable, and ethical personnel
C) Separation of duties
D) Documents
27) In the following situation, which internal control procedure needs strengthening?
At Hofstra Services, the junior accountant collects checks and cash from customers and records the transactions into the Journal. The controller approves the journal entries and bank reconciliations. The treasurer signs checks and approves contracts.
A) Assignment of responsibilities
B) Competent, reliable, and ethical personnel
C) Separation of duties
D) Documents