1. All of the following are examples of internal control procedures except
A. customer satisfaction surveys.
B. reconciling the bank statement.
C. using prenumbered documents.
D. insistence that employees take vacations.
2. Each of the following is a feature of internal control except
A. bonding of employees.
B. recording of all transactions.
C. separation of duties.
D. an extensive marketing plan.
3. Internal controls are concerned with
A. preparing income tax returns.
B. only manual systems of accounting.
C. the extent of government regulations.
D. safeguarding assets.
4. From an internal control standpoint, the asset most susceptible to improper diversion and use is
A. land.
B. prepaid insurance.
C. cash.
D. buildings.
5. The control principle related to not having the same person authorize and pay for goods is known as
A. independent internal verification.
B. rotation of duties.
C. separation of duties.
D. establishment of responsibility.
6. Two individuals at a retail store work the same cash register. You evaluate this situation as
A. a violation of separation of duties.
B. a violation of establishment of responsibility.
C. supporting the establishment of responsibility.
D. supporting internal independent verification.
7. Bonding involves all of the following except
A. The insurance company screens employees before they are added to the policy.
B. The company informs employees that the insurance company will vigorously prosecute all offenders.
C. The company obtains insurance protection against misappropriation of assets by a dishonest employee.
D. Employees do not commit inappropriate acts because of the threat of prosecution and their loyalty to the employer.
8. The reconciliation of the cash register tape with the cash in the register is an example of
A. establishment of responsibility.
B. segregation of duties.
C. independent internal verification.
D. other controls.
9. The use of prenumbered checks is an example of
A. independent internal verification.
B. establishment of responsibility.
C. segregation of duties.
D. documentation procedures.
10. Which of the following would be added to the balance per bank on a bank reconciliation?
A. Service charges.
B. Notes collected by the bank.
C. Outstanding checks.
D. Deposits in transit.