Which situation indicates a weak internal control structure?

Question 1

Which type of control is considered a compensating control?

segregation of duties

access control

supervision

accounting records

Question 2

In regard to the bill of lading which of the following is false?

The shipping clerk normally prepares the bill of lading

It is a formal contract between the seller and the shipping company

It establishes legal ownership and responsibility for assets in transit

It is completed before the packing slip and shipping notice

Question 3

The bill of lading is prepared by the

sales clerk

warehouse clerk

shipping clerk

billing clerk

Question 4

Good internal controls in the revenue cycle should ensure all of the following except

all sales are profitable

all sales are recorded

credit is authorized

inventory to be shipped is not stolen

Question 5

Which of following functions should be segregated?

opening the mail and recording cash receipts in the journal

authorizing credit and determining reorder quantities

shipping goods and preparing the bill of lading

providing information on inventory levels and reconciling the bank statement

Question 6

Which situation indicates a weak internal control structure?

the AR clerk authorizes the write off of bad debts

the record- keeping clerk maintains both AR and AP subsidiary ledgers

the inventory control clerk authorizes inventory purchases

the AR clerk prepares customer statements every month

Question 7

When will a credit check approval most likely require specific authorization by the credit department?

when verifying that the current transaction does not exceed the customer’s credit limit

when verifying that the current transaction is with a valid customer

when a valid customer places a materially large order

when a valid customer returns goods

Question 8

Which of the following is not one of the three rules that govern segregation of duties?

All transactions should be independently verified to verify the completeness and accuracy of the transaction

Transaction authorization should be separate from transaction processing

Asset custody should be separate from the task of asset record keeping

The organization should be structured so that the perpetration of a fraud requires collusion between two or more individuals

Question 9

Which situation indicates a weak internal control structure?

the mailroom clerk authorizes credit memos

the record keeping clerk maintains both accounts receivable and accounts payable subsidiary ledgers

the warehouse clerk obtains a signature before releasing goods for shipment

the accounts receivable clerk prepares customer statements every month

Question 10

The credit department

prepares credit memos when goods are returned

approves credits to accounts receivable when payments are received

authorizes the granting of credit to customers

none of the above