Question : Multiple Choice Questions 28.In establishing a strong internal control system at : 1254460

Multiple Choice Questions 

28.In establishing a strong internal control system at Hook Company, management is concerned with administrative controls. Administrative controls include:   

A. the reconciliation of the bank statement.

B. accuracy of the recording procedures.

C. performance evaluation.

D. maintenance of accurate inventory records.

29.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. The control procedure, separation of duties, prohibits the employment of a husband and wife or other closely related parties within the same company.

C. Internal accounting controls are limited to the policies and procedures used to protect the company from embezzlement.

D. Strong internal controls provide reasonable assurance that the objectives of a company will be accomplished.

30.Hanover Company has established internal control policies and procedures in order to achieve the following objectives:1) Safeguard the company’s assets.2) Assure that the accounting records contain reliable information.3) Effective evaluation of management performance.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

31.Which of the following is not a generally recognized internal control procedure?   

A. Establishment of clear lines of authority.

B. Customer service comment cards.

C. Requiring regular vacations for certain employees.

D. Having employees covered by a fidelity bond.

32.Which of the following statements accurately describes a fidelity bond?   

A. Insurance that the company buys to protect itself from loss due to employee dishonesty.

B. Proper procedures for processing transactions.

C. Procedures to provide reasonable assurance that the objectives of a company are accomplished.

D. Guidelines or policies that limit the actions of different levels of management.

33.Which of the following is not one of the purposes of an internal control system?   

A. Safeguarding the company’s assets.

B. Ensuring that the company is using the most effective marketing plan.

C. The assessment of the degree of compliance with company policies and public laws.

D. The evaluation of performance.

34.Which of the following is not considered an accounting control?   

A. Performance evaluations.

B. Requiring employees to take vacations.

C. Bonding of employees.

D. Use of prenumbered documents.

35.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. Use of prenumbered documents.

B. Physical controls.

C. Fidelity bonding.

D. Separation of duties.

36.The accountant for Barb’s Bookstore balanced out the cash register for the day. The register indicates $1,031.50 in sales, the change fund at the beginning of the day was $125 and the actual cash in the register is $1,150.25 (including the change fund, previously accounted for). What is the effect on the financial statements of the entry to record the day’s sales and any related overage or shortage?     

A. Option A

B. Option B

C. Option C

D. Option D

37.Which of the following is not an internal control procedure for the control of cash receipts?   

A. Immediate preparation of records of all cash receipts.

B. Customers should be given written receipts for all monies paid.

C. Use of prenumbered checks.

D. All cash should be deposited frequently.