31. What are the three types of audit opinion, and what is the meaning of each? Which type of opinion is considered the best?
32. What is a disclaimer of audit opinion?
33. In establishing a strong internal control system at Banks Company, management is concerned with administrative controls. Administrative controls include:
A. performance evaluation
B. accuracy of the recording procedures.
C. keeping cash in a safe.
D. maintenance of accurate inventory records.
34. Which of the following statements concerning internal controls is true?
A. Internal administrative controls are designed to limit the amount of funds spent on investments.
B. Strong internal controls provide reasonable assurance that the objectives of a company will be accomplished.
C. Internal accounting controls are limited to the policies and procedures used to protect the company from embezzlement.
D. The control procedure, separation of duties, prohibits the employment of a husband and wife or other closely related parties within the same company.
35. Chester Company has established internal control policies and procedures in order to achieve the following objectives:
1) Effective evaluation of management performance.
2) Assure that the accounting records contain reliable information.
3) Safeguard the company's assets.
4) Assure that employees comply with company policy.
Which of these objectives are achieved by accounting controls?
A. Objectives 1 and 2
B. Objectives 2 and 3
C. Objectives 3 and 4
D. All four objectives
36. Which of the following is
not
a generally recognized internal control procedure?
A. Establishment of clear lines of authority.
B. Having employees covered by a fidelity bond.
C. Requiring regular vacations for certain employees.
D. Customer service comment cards.
37. Which of the following statements accurately describes a fidelity bond?
A. Procedures to provide reasonable assurance that the objectives of a company are accomplished.
B. Proper procedures for processing transactions.
C. Insurance that the company buys to protect itself from loss due to employee dishonesty.
D. Guidelines or policies that limit the actions of different levels of management.
38. Which of the following is
not
one of the purposes of an internal control system?
A. Safeguarding the company's assets.
B. The evaluation of performance.
C. The assessment of the degree of compliance with company policies and public laws.
D. Ensuring that the company is using the most effective marketing plan.
39. Which of the following is
not
considered an accounting control?
A. Requiring employees to take vacations.
B. Performance evaluations.
C. Bonding of employees.
D. Use of prenumbered documents.
40. Which internal control procedure addresses the idea that the likelihood of employee fraud or theft is reduced if collusion is required to accomplish it?
A. Separation of duties.
B. Physical controls.
C. Fidelity bonding.
D. Use of prenumbered documents.