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Which of the following statements about the control environment is false a
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| 5. Which of the following statements about the control environment is false a. Management’s attitudes toward internal control and ethical behavior have little impact on employee beliefs or actions. (Correct. This statement is false. Management’s attitude toward internal control is critical to the organization’s effectiveness and success. They set the tone at the top that other employees follow.) b. An overly complex or unclear organizational structure maybe indicative of problems that are more serious. (Incorrect. This is a true statement. Management may intentionally build overly complex or unclear organizational structures to hide fraud or errors.) c. A written policy and procedures manual is an important tool for assigning authority and responsibility. (Incorrect. This is a true statement. A written policy and procedures manual explains proper business practices, describes the knowledge and experience needed by key personnel, and lists the resources provided to carryout specific duties.) d. Supervision is especially important in organizations that cannot afford elaborate responsibility reporting or are too small to have an adequate separation of duties. (Incorrect. This is a true statement. In many organizations, effective supervision takes the place of more expensive controls. Effective supervision involves training and assisting employees, monitoring their performance, correcting errors, and safeguarding assets by overseeing employees who have access to them.) 6. To achieve effective segregation of duties, certain functions must be separated. Which of the following is the correct listing of the accounting-related functions that must be segregated? a. control, recording, and monitoring (Incorrect. See Figure 7-5.) ▶ b. authorization, recording, and custody (Correct. See Figure c. control, custody, and authorization (Incorrect. See Figured. monitoring, recording, and planning (Incorrect. See Figure 7-5.) 7. Which of the following is NOT an independent check? a. bank reconciliation (Incorrect. A bank reconciliation is an independent check, as are top-level reviews, analytical reviews, reconciling two independently maintained sets of records, comparisons of actual quantities with recorded amounts, double-entry accounting, and independent reviews.) b. periodic comparison of subsidiary ledger totals to control accounts (Incorrect. Ape- riodic comparison of subsidiary ledger totals to control accounts is an independent check, as are top-level reviews, analytical reviews, reconciling two independently maintained sets of records, comparisons of actual quantities with recorded amounts, double-entry accounting, and independent reviews.) c. trial balance (Incorrect. Atrial balance is an independent check, as are top-level reviews, analytical reviews, reconciling two independently maintained sets of records, comparisons of actual quantities with recorded amounts, double-entry accounting, and independent reviews d. re-adding the total of a batch of invoices and comparing it with your first total (Correct. One person performing the same procedure twice using the same documents, such as re-adding invoice batch totals, is not an independent check because it does not involve a second persona second set of documents or records, or a second process.) 8. Which of the following is a control procedure relating to both the design and the use of documents and records? a. locking blank checks in a drawer (Incorrect. Locking blank checks in a drawer is not a control procedure related to the design of documents.) b. reconciling the bank account (Incorrect. Reconciling the bank account is not a control procedure related to the design of documents.) CHAPTER 7 CONTROL AND ACCOUNTING INFORMATION SYSTEMS c. sequentially prenumbering sales invoices (Correct. Designing documents so that they are sequentially prenumbered and then using them in order is a control procedure relating to both the design and the use of documents.) d. comparing actual physical quantities with recorded amounts (Incorrect. Comparing actual quantities to recorded amounts is not a control procedure related to the design of documents.) Download 1.2 Mb. Share with your friends:
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