Question 1

Which of the following statements regarding the authorization of general ledger posting is NOT true?

Accepted Answer

A)  Posting to the general ledger always requires specific authorization.
B)  User IDs and passwords can serve as authorization to post transactions to the general ledger.
C)  A journal voucher serves as authorization for manual systems.
D)  As IT systems become more automated, the authorization of general ledger posting is moved to lower levels of employees.E) C) and D)
F) B) and D)

Question 2

A common interest for manufacturing, retail, and service firms is:

Accepted Answer

A)  Inventory
B)  Revenues
C)  Profitability
D)  Both revenues and profitabilityE) A) and B)
F) B) and C)

Question 3

Transactions are recorded in the special journals and subsidiary ledgers:

Accepted Answer

A)  At the time of the transaction
B)  Only when approved by top management
C)  Only during the adjusting process
D)  Only during the closing processE) All of the above
F) A) and B)

Question 4

Within the revenue and return processes, systems and controls result from transactions that are:

Accepted Answer

A)  Large volumes of daily materials transactions
B)  Large volumes of daily sales and cash inflow transactions
C)  Periodic
D)  InfrequentE) All of the above
F) A) and D)

Question 5

Select the true statement from those listed below:

Accepted Answer

A)  Managers only need reports showing dollar values.
B)  Managers only need reports showing unit data.
C)  All managers need the same information.
D)  Managers need the information associated with their area of responsibility. E) All of the above
F) A) and B)

Question 6

The decision to raise or acquire capital funds is:

Accepted Answer

A)  Is the responsibility of contract stock underwriters
B)  Is the responsibility of contract bond underwriters
C)  Affects only bonds
D)  Is the responsibility of the board of directorsE) B) and C)
F) A) and D)

Question 7

Select the correct statement from the following.

Accepted Answer

A)  To review purchases from a vendor, inspect the purchases journal; to review payments to a vendor, inspect the cash receipts journal.
B)  To review purchases from a vendor and review payments to a vendor, inspect the cash disbursements journal.
C)  To review the purchases from a vendor, inspect the purchases journal; to determine inventory levels of a specific item, inspect the subsidiary ledger for inventory.
D)  To review the payments to a vendor, inspect the cash receipts journal; to determine inventory levels of a specific item, inspect the inventory journal.E) B) and C)
F) B) and D)

Question 8

As computerized accounting systems get more and more complex and integrated:

Accepted Answer

A)  The level of authorization for posting gets higher in the level of responsibilities.
B)  The level of authorization for posting has not changed.
C)  The level of authorization for posting gets lower in the level of responsibilities.
D)  More levels of authorization are required.E) B) and C)
F) A) and C)

Question 9

Financial statements:

Accepted Answer

A)  Are generated from the values of the special journals and subsidiary ledgers
B)  Are presented with complete chart of account detail
C)  May contain condensed data from the general ledger
D)  Show units in inventory and dollar value of those unitsE) A) and D)
F) All of the above

Question 10

The factor that does NOT affect internal reports is:

Accepted Answer

A)  The type of organization
B)  The audit status of the organization
C)  The underlying function being managed
D)  The time horizonE) All of the above
F) A) and D)

Question 11

Capital is/are the funds:

Accepted Answer

A)  Utilized to acquire long-term and short-term or current assets
B)  Received from customers from accounts receivable
C)  Utilized to acquire long-term assets
D)  That are cash inflows regardless of source E) B) and D)
F) C) and D)

Question 12

Fraud is:

Accepted Answer

A)  Harder to conceal in the routine events of conversion and sales
B)  Harder to conceal in the administrative processes such as investments because they are nonroutine and the number of transactions varies
C)  Harder to conceal when initiated by top management due to limited access to the records
D)  Potentially avoided by proper internal control processesE) All of the above
F) C) and D)

Question 13

External reports do not include:

Accepted Answer

A)  Balance sheets
B)  Income statements
C)  Sales reports
D)  Cash flowsE) A) and D)
F) B) and C)

Question 14

Which of the following is NOT a special journal?

Accepted Answer

A)  Sales journal
B)  Inventory journal
C)  Cash receipts journal
D)  Payroll journalE) A) and D)
F) None of the above

Question 15

Closing entries:

Accepted Answer

A)  Close all of the general ledger accounts
B)  End the fiscal period
C)  Close all of the subsidiary ledger accounts
D)  Are journalized in the subsidiary ledgersE) B) and C)
F) A) and D)

Question 16

Equity is considered:

Accepted Answer

A)  Bonds and loans with payment schedules several years in the future
B)  Stocks
C)  Loans with payment due in the near futur
D)  All of the above are examples of long-term debt.E) A) and C)
F) A) and B)

Question 17

While using a computerized IT accounting system, which of the following items would be included in the audit trail: general ledger, electronic images, journal vouchers, paper documents, source documents, special journals, and subsidiary ledgers?

Accepted Answer

A)  All of those listed
B)  Electronic images and paper documents
C)  Electronic images, paper documents,and subsidiary ledgers 
D)  General ledger, paper documents, special journals, and subsidiary ledgersE) All of the above
F) C) and D)

Question 18

Select the correct statement from the following:

Accepted Answer

A)  If the trial balance debits equal the trial balance credits, adjusting entries are not necessary.
B)  Adjusting entries are made after the adjusted trial balance report is printed.
C)  Accounts payable information in detail can be found in both the general ledger and the accounts payable subsidiary ledger.
D)  Financial statements must be prepared before the closing entries are journalized.E) A) and D)
F) C) and D)

Question 19

When management designs and implements effective administrative processes:

Accepted Answer

A)  Delegation of responsibility is prohibited.
B)  A budgeting process is a method of corporate governance.
C)  The responsibility of executing related capital functions to employees is prohibited.
D)  The ability to steal or misuse capital is eliminated.E) A) and B)
F) A) and C)

Question 20

A proper corporate governance structure must be in place in order to properly deter instances of:

Accepted Answer

A)  Fraud
B)  Theft
C)  Misuse or manipulation of administrative resources 
D)  All of the above are correctE) All of the above
F) B) and C)

Exam 12: Administrative Processes and Controls

As computerized accounting systems get more and more complex and integrated:

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A proper corporate governance structure must be in place in order to properly deter instances of:

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A common interest for manufacturing, retail, and service firms is:

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External reports do not include:

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The decision to raise or acquire capital funds is:

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Transactions are recorded in the special journals and subsidiary ledgers:

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Select the correct statement from the following:

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Financial statements:

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Within the revenue and return processes, systems and controls result from transactions that are:

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Fraud is:

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Select the true statement from those listed below:

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Capital is/are the funds:

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The factor that does NOT affect internal reports is:

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Select the correct statement from the following.

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Closing entries:

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While using a computerized IT accounting system, which of the following items would be included in the audit trail: general ledger, electronic images, journal vouchers, paper documents, source documents, special journals, and subsidiary ledgers?

Correct AnswerverifiedShow Answer

Which of the following statements regarding the authorization of general ledger posting is NOT true?

Correct AnswerverifiedShow Answer

When management designs and implements effective administrative processes:

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Which of the following is NOT a special journal?

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Equity is considered:

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