Internal Controls and Business Processes
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1
1) Julia's Cookies has identified the following B2C cash collections control activity risk: "Cash passing between customers and cashiers may result in cashiers pocketing cash." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
Only cashless payments are accepted in stores
Password logs are only available to authorized users
Food tampering stickers or seals on delivery containers
Social media posts are subject to review and approval before posting
Only cashless payments are accepted in stores
Password logs are only available to authorized users
Food tampering stickers or seals on delivery containers
Social media posts are subject to review and approval before posting
Correct Answer: Only cashless payments are accepted in stores
2
2) What type of HR control activity is implemented to prevent a wrongful termination lawsuit?
Managers must complete an HR-authorized employee termination checklist and submit to HR.
Employee access to the system is disabled immediately upon termination.
Terminated employees sign a noncompete agreement during the exit interview.
Company credit cards are collected from the employee, paid, and closed at the end of the billing cycle.
2) What type of HR control activity is implemented to prevent a wrongful termination lawsuit?
Managers must complete an HR-authorized employee termination checklist and submit to HR.
Employee access to the system is disabled immediately upon termination.
Terminated employees sign a noncompete agreement during the exit interview.
Company credit cards are collected from the employee, paid, and closed at the end of the billing cycle.
Correct Answer: Managers must complete an HR-authorized employee termination checklist and submit to HR.
3
3) The 3-way match takes documents from 3 departments and matches them before paying a vendor invoice. Choose from the list below one of the departments a document should be received from by accounts payable to perform the match.
Marketing
Operations
Sales
Receiving
3) The 3-way match takes documents from 3 departments and matches them before paying a vendor invoice. Choose from the list below one of the departments a document should be received from by accounts payable to perform the match.
Marketing
Operations
Sales
Receiving
Correct Answer: Receiving
4
4) Julia's Cookies has identified the following recording cash receipts control activity risk: "Recording inflated receipts from customers may result in overstated revenues." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
Implement electronic funds transfer directly to the company's bank account or a lockbox system.
Perform monthly bank reconciliations with management review.
Regular independent bank reconciliations with management review
Perform independent check of remittance advices from customers against daily remittance list.
4) Julia's Cookies has identified the following recording cash receipts control activity risk: "Recording inflated receipts from customers may result in overstated revenues." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
Implement electronic funds transfer directly to the company's bank account or a lockbox system.
Perform monthly bank reconciliations with management review.
Regular independent bank reconciliations with management review
Perform independent check of remittance advices from customers against daily remittance list.
Correct Answer: Perform monthly bank reconciliations with management review.
5
5) As a risk advisory consultant, you are asked to evaluate and recommend improvements for the employee onboarding process for Swiftly Tech. During your evaluation you discover that Swiftly Tech's payroll department adds employees based on an email from the HR department. The lack of controls could result in payroll fraud. What do you recommend that Swiftly Tech do to avoid potential payroll fraud?
All of these answer choices are correct.
Swiftly Tech could require that all employee data be secured and changes are only made by authorized individuals.
Swiftly Tech could schedule frequent independent reviews of new hire data in the system to ensure validity and accuracy.
Swiftly Tech could require completed new hire documentation paperwork prior to employee record creation in the payroll system.
5) As a risk advisory consultant, you are asked to evaluate and recommend improvements for the employee onboarding process for Swiftly Tech. During your evaluation you discover that Swiftly Tech's payroll department adds employees based on an email from the HR department. The lack of controls could result in payroll fraud. What do you recommend that Swiftly Tech do to avoid potential payroll fraud?
All of these answer choices are correct.
Swiftly Tech could require that all employee data be secured and changes are only made by authorized individuals.
Swiftly Tech could schedule frequent independent reviews of new hire data in the system to ensure validity and accuracy.
Swiftly Tech could require completed new hire documentation paperwork prior to employee record creation in the payroll system.
Correct Answer: All of these answer choices are correct.
6
6) There are four departments in a company that are directly involved in the purchasing processes. Which department manages inventory and is responsible for ensuring that there is an optimal amount of inventory on hand, issuing requisitions when additional inventory is required?
Receiving
Purchasing
Accounts Payable
Inventory Control
6) There are four departments in a company that are directly involved in the purchasing processes. Which department manages inventory and is responsible for ensuring that there is an optimal amount of inventory on hand, issuing requisitions when additional inventory is required?
Receiving
Purchasing
Accounts Payable
Inventory Control
Correct Answer: Inventory Control
7
7) RAM Manufacturing, Inc. orders cardboard boxes from a corrugated box manufacturer. RAM Manufacturing will use boxes to ship its products to its customers. The box manufacturer begins fulfilling the order for boxes before RAM Manufacturing pays for the order. Choose from the list below the appropriate type of payment method that RAM Manufacturing has participated in.
Credit sale (B2B)
Cash sale (B2C)
Debit sale (B2C)
Advance payment (B2C or B2B)
7) RAM Manufacturing, Inc. orders cardboard boxes from a corrugated box manufacturer. RAM Manufacturing will use boxes to ship its products to its customers. The box manufacturer begins fulfilling the order for boxes before RAM Manufacturing pays for the order. Choose from the list below the appropriate type of payment method that RAM Manufacturing has participated in.
Credit sale (B2B)
Cash sale (B2C)
Debit sale (B2C)
Advance payment (B2C or B2B)
Correct Answer: Credit sale (B2B)
8
8) Which off the following is a factor to consider when determining a company's degree of integration in HR and payroll systems?
All of these answer choices are correct.
Size of the business
Support from management
Ability to generate user buy-in
8) Which off the following is a factor to consider when determining a company's degree of integration in HR and payroll systems?
All of these answer choices are correct.
Size of the business
Support from management
Ability to generate user buy-in
Correct Answer: All of these answer choices are correct.
9
9) Highly valuable data is collected during the exit interview. What types of employee termination reports might be valuable for review?
Turnover rate
Number of each type of employee terminations
Number of completed employee terminations
All of these answer choices are correct.
9) Highly valuable data is collected during the exit interview. What types of employee termination reports might be valuable for review?
Turnover rate
Number of each type of employee terminations
Number of completed employee terminations
All of these answer choices are correct.
Correct Answer: All of these answer choices are correct.
10
10) Julia's Cookies has identified the following B2B pricing control activity risk: "Inappropriately given or unauthorized customer discounts may result in financial loss." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
Standardized scripts and templates for marketing materials
Defined roles and responsibilities for pricing functions
Policies and procedures for user access are clearly documented and authorized.
Independent checks on pricing and sales team member's work
10) Julia's Cookies has identified the following B2B pricing control activity risk: "Inappropriately given or unauthorized customer discounts may result in financial loss." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
Standardized scripts and templates for marketing materials
Defined roles and responsibilities for pricing functions
Policies and procedures for user access are clearly documented and authorized.
Independent checks on pricing and sales team member's work
Correct Answer: Defined roles and responsibilities for pricing functions
11
11) What type of payroll processing control is designed to avoid fines associated with noncompliance with statutory requirements?
Reconcile payroll and employee records.
Complete a payroll processing checklist for each pay period.
Reconcile payroll withholdings and the general ledger accounts.
Controller reviews and signs payroll checks.
11) What type of payroll processing control is designed to avoid fines associated with noncompliance with statutory requirements?
Reconcile payroll and employee records.
Complete a payroll processing checklist for each pay period.
Reconcile payroll withholdings and the general ledger accounts.
Controller reviews and signs payroll checks.
Correct Answer: Reconcile payroll withholdings and the general ledger accounts.
12
12) Which of the following is an advantage to integrating the information system for HR and payroll processing?
Improving data quality
All of these answer choices are correct.
Quick access to data
Reducing data redundancies
12) Which of the following is an advantage to integrating the information system for HR and payroll processing?
Improving data quality
All of these answer choices are correct.
Quick access to data
Reducing data redundancies
Correct Answer: All of these answer choices are correct.
13
13) Which department receives the purchase requisitions and transforms them into purchase orders?
Accounts Payable
Purchasing
Inventory Control
Receiving
13) Which department receives the purchase requisitions and transforms them into purchase orders?
Accounts Payable
Purchasing
Inventory Control
Receiving
Correct Answer: Purchasing
14
14) As a risk advisory consultant, you are asked to evaluate and recommend improvements for the employee onboarding process for Swiftly Tech. During your evaluation you discover that Swiftly Tech's new hires often fail to understand company policies. What action do you recommend that Swiftly Tech take?
All of these answer choices are correct.
Swiftly Tech should have new hires acknowledge receipt and understanding of company policies.
Swiftly Tech should require that new hires attend an employee orientation that includes a review of the employee handbook before beginning their job duties.
Swiftly Tech should include an employment agreement in the new hire package that requires that the employee sign that the job description and employee's responsibilities are understood.
14) As a risk advisory consultant, you are asked to evaluate and recommend improvements for the employee onboarding process for Swiftly Tech. During your evaluation you discover that Swiftly Tech's new hires often fail to understand company policies. What action do you recommend that Swiftly Tech take?
All of these answer choices are correct.
Swiftly Tech should have new hires acknowledge receipt and understanding of company policies.
Swiftly Tech should require that new hires attend an employee orientation that includes a review of the employee handbook before beginning their job duties.
Swiftly Tech should include an employment agreement in the new hire package that requires that the employee sign that the job description and employee's responsibilities are understood.
Correct Answer: All of these answer choices are correct.
15
15) The determination and recording of ________ based on credit checks and payment history, must be checked before accepting an order from a customer.
credit limits
credit terms
debit terms
debit limits
15) The determination and recording of ________ based on credit checks and payment history, must be checked before accepting an order from a customer.
credit limits
credit terms
debit terms
debit limits
Correct Answer: credit limits
16
16) Numerous departments are involved in the fixed assets purchases and payments processes. Choose from the list below one of the departments that is involved in the fixed assets purchases and payments processes.
Operations
Sales
Marketing
Fixed Asset Accounting
16) Numerous departments are involved in the fixed assets purchases and payments processes. Choose from the list below one of the departments that is involved in the fixed assets purchases and payments processes.
Operations
Sales
Marketing
Fixed Asset Accounting
Correct Answer: Fixed Asset Accounting
17
17) Numerous departments are involved in the fixed assets purchases and payments processes. Choose from the list below one of the departments that is involved in the fixed assets purchases and payments processes.
Operations
Marketing
Sales
Receiving
17) Numerous departments are involved in the fixed assets purchases and payments processes. Choose from the list below one of the departments that is involved in the fixed assets purchases and payments processes.
Operations
Marketing
Sales
Receiving
Correct Answer: Receiving
18
18) Which of the following statements about control activities related to employee onboarding is FALSE?
Companies should establish and document policies and procedures for hiring.
Business processes like HR, payroll, and onboarding do not have a master list of controls.
The cost of employee onboarding control activities should not exceed the benefit.
Control activities focus on fraud prevention to prevent financial loss for the company.
18) Which of the following statements about control activities related to employee onboarding is FALSE?
Companies should establish and document policies and procedures for hiring.
Business processes like HR, payroll, and onboarding do not have a master list of controls.
The cost of employee onboarding control activities should not exceed the benefit.
Control activities focus on fraud prevention to prevent financial loss for the company.
Correct Answer: Control activities focus on fraud prevention to prevent financial loss for the company.
19
19) Bid rigging and kickbacks create unfair and uncompetitive bidding processes which may result in financial losses due to paying higher prices in the absence of competition. Choose the best control activity to address this risk.
Expand the list of bidders to make it more difficult for bidders to collude.
Regular management review of fixed asset accounting transactions and trends in fixed asset ratios
Tagging all fixed assets
Periodically checking fixed assets against the fixed asset records
19) Bid rigging and kickbacks create unfair and uncompetitive bidding processes which may result in financial losses due to paying higher prices in the absence of competition. Choose the best control activity to address this risk.
Expand the list of bidders to make it more difficult for bidders to collude.
Regular management review of fixed asset accounting transactions and trends in fixed asset ratios
Tagging all fixed assets
Periodically checking fixed assets against the fixed asset records
Correct Answer: Expand the list of bidders to make it more difficult for bidders to collude.
20
20) Public accounting firms often require terminated employees to exit on the same day as a resignation is submitted, even in the event of a voluntary termination. Why is the same-day exit necessary?
Public accounting firms are required by accounting regulations to not allow employees to work after submitting a resignation.
Public accounting firms are required by HR standards to interview and escort ex-employees from the building and immediately terminate electronic access.
Public accounting firms must prevent ex-employees from discussing any company matters with others at the company after termination.
Public accounting firms must prevent conflicts of interest if the employee has already accepted a job offer from a direct competitor.
20) Public accounting firms often require terminated employees to exit on the same day as a resignation is submitted, even in the event of a voluntary termination. Why is the same-day exit necessary?
Public accounting firms are required by accounting regulations to not allow employees to work after submitting a resignation.
Public accounting firms are required by HR standards to interview and escort ex-employees from the building and immediately terminate electronic access.
Public accounting firms must prevent ex-employees from discussing any company matters with others at the company after termination.
Public accounting firms must prevent conflicts of interest if the employee has already accepted a job offer from a direct competitor.
Correct Answer: Public accounting firms must prevent conflicts of interest if the employee has already accepted a job offer from a direct competitor.
21
21) Numerous departments are involved in the fixed assets purchases and payments processes. Choose from the list below one of the departments that is involved in the fixed assets purchases and payments processes.
Operations
Sales
Accounts Payable
Marketing
21) Numerous departments are involved in the fixed assets purchases and payments processes. Choose from the list below one of the departments that is involved in the fixed assets purchases and payments processes.
Operations
Sales
Accounts Payable
Marketing
Correct Answer: Accounts Payable
22
22) Julia's Cookies has identified the following cash receipt control activity risk: "Checks received in the mail that are lost or misappropriated after receipt may result in financial loss and customer dissatisfaction." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
Automated calculation of discounts
Prepare a daily remittance list immediately upon opening mail and restrictively endorse checks.
Regular independent bank reconciliations with management review
Perform an independent check of remittance advice from customers against the daily remittance list.
22) Julia's Cookies has identified the following cash receipt control activity risk: "Checks received in the mail that are lost or misappropriated after receipt may result in financial loss and customer dissatisfaction." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
Automated calculation of discounts
Prepare a daily remittance list immediately upon opening mail and restrictively endorse checks.
Regular independent bank reconciliations with management review
Perform an independent check of remittance advice from customers against the daily remittance list.
Correct Answer: Prepare a daily remittance list immediately upon opening mail and restrictively endorse checks.
23
23) As a risk advisory consultant, you are asked to evaluate and recommend improvements for the employee onboarding process for Swiftly Tech. During your evaluation you discover that Swiftly Tech's employee data was part of a data breach from a third-party background check provider. What action do you recommend that Swiftly Tech take?
Swiftly Tech should require employees to acquire and provide their own background check data.
Swiftly Tech should require background check providers to have their own internal controls to ensure the confidentiality and security of data.
All of these answer choices are correct.
Swiftly Tech should forgo background checks to avoid sharing confidential employee data with other companies.
23) As a risk advisory consultant, you are asked to evaluate and recommend improvements for the employee onboarding process for Swiftly Tech. During your evaluation you discover that Swiftly Tech's employee data was part of a data breach from a third-party background check provider. What action do you recommend that Swiftly Tech take?
Swiftly Tech should require employees to acquire and provide their own background check data.
Swiftly Tech should require background check providers to have their own internal controls to ensure the confidentiality and security of data.
All of these answer choices are correct.
Swiftly Tech should forgo background checks to avoid sharing confidential employee data with other companies.
Correct Answer: Swiftly Tech should require background check providers to have their own internal controls to ensure the confidentiality and security of data.
24
24) Which department typically receives the orders along with a supplier-generated packing slip, checks the condition of the shipment and counts the quantities?
Inventory Control
Accounts Payable
Purchasing
Receiving
24) Which department typically receives the orders along with a supplier-generated packing slip, checks the condition of the shipment and counts the quantities?
Inventory Control
Accounts Payable
Purchasing
Receiving
Correct Answer: Receiving
25
25) Numerous departments are involved in the purchases and payments processes. Choose from the list below one of the departments that is involved in the purchases and payments processes.
Sales
Marketing
Operations
Purchasing
25) Numerous departments are involved in the purchases and payments processes. Choose from the list below one of the departments that is involved in the purchases and payments processes.
Sales
Marketing
Operations
Purchasing
Correct Answer: Purchasing
26
26) Choose from the list below the best definition of Inventory management.
Inventory management is the process that coordinates the communication of inventory availability and needs across the purchasing, conversion and sales processes.
Inventory management manages the orders along with a supplier-generated packing slip, which shows quantities and descriptions.
Inventory management is the lifecycle of a product from procuring raw materials through customer sales.
Inventory management tracks products in the process of being manufactured.
26) Choose from the list below the best definition of Inventory management.
Inventory management is the process that coordinates the communication of inventory availability and needs across the purchasing, conversion and sales processes.
Inventory management manages the orders along with a supplier-generated packing slip, which shows quantities and descriptions.
Inventory management is the lifecycle of a product from procuring raw materials through customer sales.
Inventory management tracks products in the process of being manufactured.
Correct Answer: Inventory management is the process that coordinates the communication of inventory availability and needs across the purchasing, conversion and sales processes.
27
27) What type of payroll processing control is designed to prevent unauthorized payroll transactions being processed?
Reconcile payroll and employee records.
Reconcile payroll withholdings and the general ledger accounts.
Controller reviews and signs payroll checks.
Complete a payroll processing checklist for each pay period.
27) What type of payroll processing control is designed to prevent unauthorized payroll transactions being processed?
Reconcile payroll and employee records.
Reconcile payroll withholdings and the general ledger accounts.
Controller reviews and signs payroll checks.
Complete a payroll processing checklist for each pay period.
Correct Answer: Controller reviews and signs payroll checks.
28
28) ________ are dependent on the customers' creditworthiness.
Debit terms
Credit terms
Sales orders
Purchase orders
28) ________ are dependent on the customers' creditworthiness.
Debit terms
Credit terms
Sales orders
Purchase orders
Correct Answer: Credit terms
29
29) Choose from the list below the best control activity to prevent purchase requisitions split into more than one purchase order to circumvent authorized limits that may result in unauthorized or fraudulent purchases.
An authorized person from the department making the request must approve the requisition.
Each blanket purchase order must specify monetary limits and have a specified duration.
Match purchase requisitions with purchase orders and generate an exception report investigation.
Separate the duties of ordering goods from receiving, payment, and accounting responsibilities.
29) Choose from the list below the best control activity to prevent purchase requisitions split into more than one purchase order to circumvent authorized limits that may result in unauthorized or fraudulent purchases.
An authorized person from the department making the request must approve the requisition.
Each blanket purchase order must specify monetary limits and have a specified duration.
Match purchase requisitions with purchase orders and generate an exception report investigation.
Separate the duties of ordering goods from receiving, payment, and accounting responsibilities.
Correct Answer: Match purchase requisitions with purchase orders and generate an exception report investigation.
30
30) Capitalizing items that are not fixed assets may result in inflated net income and assets, financial statement misstatements, fines and penalties, or reputational damage. Choose the best control activity to address this risk.
Require bidders to sign and submit non-collusion affidavits stating the bidder has not colluded with employees or other bidders.
Have a code of conduct that employees must agree to and sign, as well as training for employees that includes firing and legal actions for engaging in fraud.
Monthly fixed asset reconciliation and independent review of the subsidiary ledger with the general ledger
Expand the list of bidders to make it more difficult for bidders to collude.
30) Capitalizing items that are not fixed assets may result in inflated net income and assets, financial statement misstatements, fines and penalties, or reputational damage. Choose the best control activity to address this risk.
Require bidders to sign and submit non-collusion affidavits stating the bidder has not colluded with employees or other bidders.
Have a code of conduct that employees must agree to and sign, as well as training for employees that includes firing and legal actions for engaging in fraud.
Monthly fixed asset reconciliation and independent review of the subsidiary ledger with the general ledger
Expand the list of bidders to make it more difficult for bidders to collude.
Correct Answer: Monthly fixed asset reconciliation and independent review of the subsidiary ledger with the general ledger
31
31) Julia's Cookies has identified the following cash receipt control activity risk: "Checks received in the mail that are lost or misappropriated after receipt may result in financial loss and customer dissatisfaction." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
Automated calculation of discounts
Implement electronic funds transfer directly to the company's bank account or a lockbox system.
Regular independent bank reconciliations with management review
Perform an independent check of remittance advice from customers against the daily remittance list.
31) Julia's Cookies has identified the following cash receipt control activity risk: "Checks received in the mail that are lost or misappropriated after receipt may result in financial loss and customer dissatisfaction." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
Automated calculation of discounts
Implement electronic funds transfer directly to the company's bank account or a lockbox system.
Regular independent bank reconciliations with management review
Perform an independent check of remittance advice from customers against the daily remittance list.
Correct Answer: Implement electronic funds transfer directly to the company's bank account or a lockbox system.
32
32) Which one of the following processes does NOT result in an accounting transaction?
Ordering raw materials
Receiving raw materials
Returning goods or negotiating allowances
Paying for purchases
32) Which one of the following processes does NOT result in an accounting transaction?
Ordering raw materials
Receiving raw materials
Returning goods or negotiating allowances
Paying for purchases
Correct Answer: Ordering raw materials
33
33) Julia's Cookies has identified the following B2B shipping control activity risk: "Lost or fraudulently diverted undelivered shipments may result in customer dissatisfaction, complaints, and financial losses." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
The ERP system matches the amount of the sales order with the credit limit in the main customer data.
The ERP system matches the customer on the sales order to the main customer data.
All shipments must have properly authorized shipping documents with an appropriate delivery address.
Restrict access to the shipping area.
33) Julia's Cookies has identified the following B2B shipping control activity risk: "Lost or fraudulently diverted undelivered shipments may result in customer dissatisfaction, complaints, and financial losses." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
The ERP system matches the amount of the sales order with the credit limit in the main customer data.
The ERP system matches the customer on the sales order to the main customer data.
All shipments must have properly authorized shipping documents with an appropriate delivery address.
Restrict access to the shipping area.
Correct Answer: Restrict access to the shipping area.
34
34) Which of the following events results in an employee termination?
All of these answers are correct.
Death
Layoff
Retirement
34) Which of the following events results in an employee termination?
All of these answers are correct.
Death
Layoff
Retirement
Correct Answer: All of these answers are correct.
35
35) The Accounting Standards Codification 606 of the U.S. GAAP has five steps for revenue recognition. Choose step 5 from the list below.
Allocate the transaction price to the performance obligations in the contract.
Recognize revenue when (or as) the entity satisfies a performance obligation.
Identify the contract with a customer.
Identify the performance obligations in the contract.
Determine the transaction price.
35) The Accounting Standards Codification 606 of the U.S. GAAP has five steps for revenue recognition. Choose step 5 from the list below.
Allocate the transaction price to the performance obligations in the contract.
Recognize revenue when (or as) the entity satisfies a performance obligation.
Identify the contract with a customer.
Identify the performance obligations in the contract.
Determine the transaction price.
Correct Answer: Recognize revenue when (or as) the entity satisfies a performance obligation.
36
36) The Accounting Standards Codification 606 of the U.S. GAAP has five steps for revenue recognition. Which one of these is the last step in the process?
Identify the performance obligations in the contract.
Recognize revenue when (or as) the entity satisfies a performance obligation.
Allocate the transaction price to the performance obligations in the contract.
Determine the transaction price.
Identify the contract with a customer.
36) The Accounting Standards Codification 606 of the U.S. GAAP has five steps for revenue recognition. Which one of these is the last step in the process?
Identify the performance obligations in the contract.
Recognize revenue when (or as) the entity satisfies a performance obligation.
Allocate the transaction price to the performance obligations in the contract.
Determine the transaction price.
Identify the contract with a customer.
Correct Answer: Recognize revenue when (or as) the entity satisfies a performance obligation.
37
37) There are four departments in a company that are directly involved in the purchasing processes. Which department receives the vendor invoices?
Accounts Payable
Receiving
Inventory Control
Purchasing
37) There are four departments in a company that are directly involved in the purchasing processes. Which department receives the vendor invoices?
Accounts Payable
Receiving
Inventory Control
Purchasing
Correct Answer: Accounts Payable
38
38) The Accounting Standards Codification 606 of the U.S. GAAP has five steps for revenue recognition. Choose step 4 from the list below.
Allocate the transaction price to the performance obligations in the contract.
Recognize revenue when (or as) the entity satisfies a performance obligation.
Identify the contract with a customer.
Identify the performance obligations in the contract.
Determine the transaction price.
38) The Accounting Standards Codification 606 of the U.S. GAAP has five steps for revenue recognition. Choose step 4 from the list below.
Allocate the transaction price to the performance obligations in the contract.
Recognize revenue when (or as) the entity satisfies a performance obligation.
Identify the contract with a customer.
Identify the performance obligations in the contract.
Determine the transaction price.
Correct Answer: Allocate the transaction price to the performance obligations in the contract.
39
39) Henri joined a public accounting firm as an intern for the summer. Henri's final project involved evaluating the firm's employee termination control activities with a goal of developing additional control activities to prevent unnecessary reputation damages for the firm. Which of the following control activities might Henri suggest?
Complete an HR-authorized employee termination checklist and submit to HR.
Remove employee's authority to act on behalf of the firm and conduct firm business.
All of these answer choices are correct.
Require HR presence at firings to ensure proper procedures and mitigate risks.
39) Henri joined a public accounting firm as an intern for the summer. Henri's final project involved evaluating the firm's employee termination control activities with a goal of developing additional control activities to prevent unnecessary reputation damages for the firm. Which of the following control activities might Henri suggest?
Complete an HR-authorized employee termination checklist and submit to HR.
Remove employee's authority to act on behalf of the firm and conduct firm business.
All of these answer choices are correct.
Require HR presence at firings to ensure proper procedures and mitigate risks.
Correct Answer: All of these answer choices are correct.
40
40) A(n) ________ transfers the payment from the customer's bank account directly into the company's bank account.
deposit slip
lockbox
bank remittance report
EFT
40) A(n) ________ transfers the payment from the customer's bank account directly into the company's bank account.
deposit slip
lockbox
bank remittance report
EFT
Correct Answer: EFT
41
41) The 3-way match takes documents from 3 departments and matches them before paying a vendor invoice. Choose from the list below one of the departments a document should be received from by accounts payable to perform the match.
Sales
Purchasing
Operations
Marketing
41) The 3-way match takes documents from 3 departments and matches them before paying a vendor invoice. Choose from the list below one of the departments a document should be received from by accounts payable to perform the match.
Sales
Purchasing
Operations
Marketing
Correct Answer: Purchasing
42
42) Choose from the list below the best definition of Supply chain management.
Supply chain management receives the orders along with a supplier-generated packing slip, which shows quantities and descriptions.
Supply chain management oversees the life cycle of a product from procuring raw materials through customer sales.
Supply chain management is the process that coordinates the communication of inventory availability and needs across the purchasing, conversion and sales processes.
Supply chain management are products in the process of being manufactured.
42) Choose from the list below the best definition of Supply chain management.
Supply chain management receives the orders along with a supplier-generated packing slip, which shows quantities and descriptions.
Supply chain management oversees the life cycle of a product from procuring raw materials through customer sales.
Supply chain management is the process that coordinates the communication of inventory availability and needs across the purchasing, conversion and sales processes.
Supply chain management are products in the process of being manufactured.
Correct Answer: Supply chain management oversees the life cycle of a product from procuring raw materials through customer sales.
43
43) Julia's Cookies has identified the following B2C delivery control activity risk: "Customers filing fictitious claims packages that were not received may result in fraudulent refunds to customers." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
Social media posts subject to review and approval before posting
Food tampering stickers or seals on delivery containers
Only cashless payments are accepted in stores
Delivery drivers take photos of packages in their delivery locations which are sent to customers via email or text message.
43) Julia's Cookies has identified the following B2C delivery control activity risk: "Customers filing fictitious claims packages that were not received may result in fraudulent refunds to customers." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
Social media posts subject to review and approval before posting
Food tampering stickers or seals on delivery containers
Only cashless payments are accepted in stores
Delivery drivers take photos of packages in their delivery locations which are sent to customers via email or text message.
Correct Answer: Delivery drivers take photos of packages in their delivery locations which are sent to customers via email or text message.
44
44) Choose from the list below the best control activity to prevent unauthorized changes to the vendor table that may result in fraudulent purchases or loss of financial assets.
All purchases routed through the purchasing department
Implement training for employees who communicate with vendors for purchasing.
Segregation of duties
Regularly review approved vendors and their performance. Update the database to remove inactive vendors and those who do not meet performance standards.
44) Choose from the list below the best control activity to prevent unauthorized changes to the vendor table that may result in fraudulent purchases or loss of financial assets.
All purchases routed through the purchasing department
Implement training for employees who communicate with vendors for purchasing.
Segregation of duties
Regularly review approved vendors and their performance. Update the database to remove inactive vendors and those who do not meet performance standards.
Correct Answer: Segregation of duties
45
45) The Accounting Standards Codification 606 of the U.S. GAAP has five steps for revenue recognition. Choose step 3 from the list below.
Identify the performance obligations in the contract.
Recognize revenue when (or as) the entity satisfies a performance obligation.
Determine the transaction price.
Allocate the transaction price to the performance obligations in the contract.
Identify the contract with a customer.
45) The Accounting Standards Codification 606 of the U.S. GAAP has five steps for revenue recognition. Choose step 3 from the list below.
Identify the performance obligations in the contract.
Recognize revenue when (or as) the entity satisfies a performance obligation.
Determine the transaction price.
Allocate the transaction price to the performance obligations in the contract.
Identify the contract with a customer.
Correct Answer: Determine the transaction price.
46
46) What type of processing accumulates transactions into groups and processes them at regular intervals?
Group
Batch
Journal
Real-time
46) What type of processing accumulates transactions into groups and processes them at regular intervals?
Group
Batch
Journal
Real-time
Correct Answer: Batch
47
47) Julia's Cookies has identified the following B2C delivery control activity risk: "Customers filing fictitious claims that products were damaged upon receipt may result in fraudulent refunds to customers." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
Only cashless payments are accepted in stores
Social media posts are subject to review and approval before posting
Refunds and returns require customers to submit a photo of the product's condition.
Food tampering stickers or seals on delivery containers
47) Julia's Cookies has identified the following B2C delivery control activity risk: "Customers filing fictitious claims that products were damaged upon receipt may result in fraudulent refunds to customers." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
Only cashless payments are accepted in stores
Social media posts are subject to review and approval before posting
Refunds and returns require customers to submit a photo of the product's condition.
Food tampering stickers or seals on delivery containers
Correct Answer: Refunds and returns require customers to submit a photo of the product's condition.
48
48) Which of the following is NOT an advantage to integrating the information system for HR and payroll processing?
Providing streamlined access to data
Minimizing efforts for data collection
Ability to generate user buy-in
Creating a single source for HR and payroll data
48) Which of the following is NOT an advantage to integrating the information system for HR and payroll processing?
Providing streamlined access to data
Minimizing efforts for data collection
Ability to generate user buy-in
Creating a single source for HR and payroll data
Correct Answer: Ability to generate user buy-in
49
49) Choose from the list below the best control activity to prevent unauthorized purchase requisitions that may result in unauthorized or fraudulent purchases.
Each blanket purchase order must specify monetary limits and have a specified duration.
Separate the duties of ordering goods from receiving, payment, and accounting responsibilities.
An authorized person from the department making the request must approve the requisition.
Match purchase requisitions with purchase orders and generate an exception report investigation.
49) Choose from the list below the best control activity to prevent unauthorized purchase requisitions that may result in unauthorized or fraudulent purchases.
Each blanket purchase order must specify monetary limits and have a specified duration.
Separate the duties of ordering goods from receiving, payment, and accounting responsibilities.
An authorized person from the department making the request must approve the requisition.
Match purchase requisitions with purchase orders and generate an exception report investigation.
Correct Answer: An authorized person from the department making the request must approve the requisition.
50
50) Numerous departments are involved in the purchases and payments processes. Choose from the list below one of the departments that is involved in the purchases and payments processes.
Collections
Receiving
Marketing
Sales
50) Numerous departments are involved in the purchases and payments processes. Choose from the list below one of the departments that is involved in the purchases and payments processes.
Collections
Receiving
Marketing
Sales
Correct Answer: Receiving
51
51) Which one of the following processes does NOT result in an accounting transaction?
Negotiating contracts and payment terms
Returning goods or negotiating allowances
Receiving raw materials
Paying for purchases
51) Which one of the following processes does NOT result in an accounting transaction?
Negotiating contracts and payment terms
Returning goods or negotiating allowances
Receiving raw materials
Paying for purchases
Correct Answer: Negotiating contracts and payment terms
52
52) Bid rigging and kickbacks create unfair and uncompetitive bidding processes which may result in financial losses. Choose the best control activity to mitigate this risk.
Tagging all fixed assets
Regular management review of fixed asset accounting transactions and trends in fixed asset ratios
Periodically checking fixed assets against the fixed asset records
Require bidders to sign and submit non-collusion affidavits stating the bidder has not colluded with employees or other bidders.
52) Bid rigging and kickbacks create unfair and uncompetitive bidding processes which may result in financial losses. Choose the best control activity to mitigate this risk.
Tagging all fixed assets
Regular management review of fixed asset accounting transactions and trends in fixed asset ratios
Periodically checking fixed assets against the fixed asset records
Require bidders to sign and submit non-collusion affidavits stating the bidder has not colluded with employees or other bidders.
Correct Answer: Require bidders to sign and submit non-collusion affidavits stating the bidder has not colluded with employees or other bidders.
53
53) Julia's Cookies has identified the following B2C marketing control activity risk: "An unauthorized user posting inappropriate content to the corporate social media accounts may result in legal or reputational damage." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
Social media posts subject to review and approval before posting
Only cashless payments accepted in stores
Security cameras covering cash registers
Food tampering stickers or seals on delivery containers
53) Julia's Cookies has identified the following B2C marketing control activity risk: "An unauthorized user posting inappropriate content to the corporate social media accounts may result in legal or reputational damage." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
Social media posts subject to review and approval before posting
Only cashless payments accepted in stores
Security cameras covering cash registers
Food tampering stickers or seals on delivery containers
Correct Answer: Social media posts subject to review and approval before posting
54
54) Julia's Cookies has identified the following B2B shipping control activity risk: "Shipments made to incorrect customers or locations may result in customer dissatisfaction, complaints, and financial losses." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
The ERP system matches the customer on the sales order to the customer master data.
Restrict access to the shipping area.
The ERP system matches the amount of the sales order with the credit limit in the customer master data.
All shipments must have properly authorized shipping documents with an appropriate delivery address.
54) Julia's Cookies has identified the following B2B shipping control activity risk: "Shipments made to incorrect customers or locations may result in customer dissatisfaction, complaints, and financial losses." Choose from the list of control activities below one of the appropriate control activities for this risk statement.
The ERP system matches the customer on the sales order to the customer master data.
Restrict access to the shipping area.
The ERP system matches the amount of the sales order with the credit limit in the customer master data.
All shipments must have properly authorized shipping documents with an appropriate delivery address.
Correct Answer: All shipments must have properly authorized shipping documents with an appropriate delivery address.
55
55) The ERP modules that manage interactions with existing, past, and potential customers are called
Finance.
Customer Relationship Management (CRM).
Human Resources (HR).
Payroll.
55) The ERP modules that manage interactions with existing, past, and potential customers are called
Finance.
Customer Relationship Management (CRM).
Human Resources (HR).
Payroll.
Correct Answer: Customer Relationship Management (CRM).
56
56) What kind of risk might employee social events prevent?
Payroll fraud
Low productivity
High employee turnover
Employee policy violations
56) What kind of risk might employee social events prevent?
Payroll fraud
Low productivity
High employee turnover
Employee policy violations
Correct Answer: High employee turnover
57
57) What department is involved in employee termination administrative processes?
Human resources
All of these answer choices are correct.
Information technology
Ex-employee's department
57) What department is involved in employee termination administrative processes?
Human resources
All of these answer choices are correct.
Information technology
Ex-employee's department
Correct Answer: All of these answer choices are correct.
58
58) Machiko joined the HR department at Takano Accounting. Takano has asked Machiko to evaluate the well-documented employee termination process for Takano. Machiko has identified that despite Takano being a public accounting firm, the company often sets exit interviews and final employment dates several days after employees voluntarily resign. Takano may be at risk of
increased turnover rates by high-performing employees.
employee retaliation based on wrongful termination.
employee records remaining in the payroll system after termination.
the employee acting on a conflict of interest in favor of their new employer.
58) Machiko joined the HR department at Takano Accounting. Takano has asked Machiko to evaluate the well-documented employee termination process for Takano. Machiko has identified that despite Takano being a public accounting firm, the company often sets exit interviews and final employment dates several days after employees voluntarily resign. Takano may be at risk of
increased turnover rates by high-performing employees.
employee retaliation based on wrongful termination.
employee records remaining in the payroll system after termination.
the employee acting on a conflict of interest in favor of their new employer.
Correct Answer: the employee acting on a conflict of interest in favor of their new employer.
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