Payments by check or EFT represent an important internal control.

The primary way that fraud is detected, prevented, or corrected is through a proper system of internal control.

A. True
B. False

Answer
True

Payments by check or EFT represent an important internal control.

A. True
B. False
Answer
True

The two most common types of fraud impacting financial statements are misappropriation of assets and fraudulent financial reporting.

A. True
B. False

Answer
True

How are outstanding checks handled in a bank reconciliation?

A. Deducted from the bank balance

B. Added to the bank balance

C. Deducted from the book balance

D. Added to the book balance

Answer
A. Deducted from the bank balance

How is interest revenue handled in a bank reconciliation?

A. Deducted from the book balance
B. Deducted from the bank balance
C. Added to the book balance
D. Added to the bank balance
Answer
C. Added to the book balance

When a company receives customers' checks by mail:

A. the mailroom sends all customer checks to the accounting department.
B. the bank deposit is prepared by the mailroom.
C. all incoming mail containing checks from customers should be opened by the mailroom.
D. the remittance advices go to the treasurer for deposit.
Answer
C. all incoming mail containing checks from customers should be opened by the mailroom.

Which of the following items is not an objective of an internal control system?

A. Ensure maximum profitability
B. Safeguard assets
C. Encourage employees to follow company policies
D. Promote operational efficiency
E. Comply with legal requirements
Answer
A. Ensure maximum profitability

Which of the following terms is not part of the fraud triangle?

A.
Opportunity

B.
Motive

C.
Rationalization

D.
Conspiracy

Answer
D.
Conspiracy