Ans: LO: 8, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
The principles of internal control include all of the following except establishment of responsibility. combining of duties. physical, mechanical, and electronic controls. independent internal verification. Ans: LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls
An example of poor internal control is the accountant should not have physical custody of the asset nor access to it. the custodian of an asset should not maintain or have access to the accounting records. one person should be responsible for handling related transactions. a salesperson makes the sale, and a different person ships the goods. Ans: LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls
Having different individuals receive cash, record cash receipts, and hold the cash is an example of establishment of responsibility. segregation of duties. documentation procedures. independent internal verification. Ans: LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Resource Management, AICPA FN: Risk Analysis, AICPA PC: None, IMA: Internal Controls
Storing cash in a company safe is an application of which internal control principle? Segregation of duties Documentation procedures Physical controls Establishment of responsibility