Multiple Choice Questions 1 Those auditing the financial statements are
Multiple Choice Questions:
1. Those auditing the financial statements are most concerned about which of the following?
a. System optimization.
b. Transaction cycles.
c. Flow of transactions through the accounts.
d. Overall operational effectiveness.
e. None of the above.

2. On which of these does internal control focus?
a. Processes.
b. Processes outcomes.
c. Process effectiveness.
d. None of the above.

3. When properly implemented, internal controls
a. Eliminate large loss exposures.
b. Eliminate material risks.
c. Minimize loss exposures.
d. Prevent large losses.
e. None of the above.

4. Which of the following is not a specific objective of internal control?
a. Ensuring compliance with applicable laws, regulations, professional rules, and contractual obligations.
b. Promoting strategic, tactical, and operational efficiency and effectiveness.
c. Promoting ethics in the corporate culture.
d. All of the above are specific objectives of internal control.

5. In many types of frauds, such as embezzlement, the cover-up is
a. The easiest part of the fraud.
b. The most difficult part of the fraud.
c. The defining characteristic of the fraud.
d. The primary characteristic of the fraud.

6. Segregation of duties relates primarily to which of the following?
a. Control activities.
b. Information and communication.
c. The control environment.
d. None of the above.

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