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Principles of Accounting, Volume 1: Financial Accounting

Chapter 8

Principles of Accounting, Volume 1: Financial AccountingChapter 8

Chapter 8

Multiple Choice

1.

C

3.

A

5.

D

7.

C

9.

A

11.

A

13.

B

15.

C

17.

B

19.

C

Questions

1.

Examples include weak internal controls, improper or nonexistent management oversight, and lack of an internal audit function or other opportunities that create the perception that the fraudster will be successful in committing a fraudulent act.

3.

Examples include vices such as gambling, living beyond one’s means, high debts, employer pressures to report fictitious accounting results, or alcohol/drug use.

5.

Protect data from corruption or damage. Have their servers mirrored at various locations around the world. Ensure that no unauthorized parties have access to the data. Ensure that all transactions are entered into the accounting system properly and accurately. If fraud or illegal access to data occurs, a good internal control will help identify the responsible party or parties.

8.

To ensure that large companies are consistent with internal controls, properly documented, and tested.

10.

One person should be responsible for the fund. If one person is in charge and the fund is short, then the petty cashier is the only one responsible for the shortage.

11.

Records all sales and inventory reduction and ensures that correct prices are charged.

13.

All differences must be researched, explained, and corrected. Differences pertaining to the bank must be reported. If fraud is suspected, a complete investigation must be performed.

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