Multiple Choice Questions:

1. Approval applies to transactions that

a. Have been not yet been authorized.

b. Are pending authorization.

c. Are fully authorized.

d. All of the above.

2. Segregation of duties applies to separating which three functions?

a. Sales, purchasing, and expenditures.

b. Ordering, receiving, and accounting

c. Accounting, authorization, and custody.

d. None of the above.

3. Audit trail permits auditors to

a. Balance and reconcile accounts.

b. Provide SOX-compliant documentation to the SEC.

c. Trace of the flow of transactions backward from accounts to source documents.

d. None of the above.

4. When fully operating, control processes

a. Must be periodically monitored.

b. Do not require monitoring.

c. Must be continually monitored.

d. Must be monitored when failures are evident.

5. Two types of transaction processing controls are

a. Operating controls and planning controls.

b. Application and environmental controls.

c. Planning and efficiency controls.

d. None of the above.

6. Application controls help ensure

a. Data accuracy, integrity, efficiency.

b. Elimination of errors.

c. Accuracy, integrity, and security.

d. All of the above.

7. An accountant opens the mail and posts checks to accounts receivable. What is the best way to describe this internal control?

a. Normal.

b. Borderline.

c. Weak.

d. Normal, borderline, or weak internal, depending on the company.