Deck 12: Administrative Processes and Controls

Question 1

Which of the following statements is NOT true regarding source of capital transactions?

A)These processes should not be initiated unless there is specific authorization by management at a top level.
B)
C)Retirement of debt is a
D)The fact that these transactions and processes cannot occur without oversight by top management means other controls are not necessary.

Answer 1

D

Question 2

Which of the following is NOT part of an administrative process?

A)The sale of stock
B)The sale of bonds
C)The write-off of bad debts
D)The purchase of marketable securities

Answer 2

C

Question 3

Which of the following is NOT generally an area of measure in a balanced scorecard?

A)Vendor
B)Customer
C)Financial
D)Learning and growth

Answer 3

A

Question 4

Which of the following statements about reporting is true?

A)External users need detailed, rather than summarized, information.
B)All reports, internal and external, are derived only from general ledger data.
C)All organizations need similar internal reports.
D)Internal reports are tailored to the specific needs of each management level and function.

Question 5

Regarding subsidiary ledgers and general ledger control accounts, which of the following is NOT true?

A)Total balances in a subsidiary ledger should always equal the balance in the corresponding general ledger account.
B)The general ledger maintains details of subaccounts.
C)Control is enhanced by separating the subsidiary ledger from the general ledger.
D)Reconciling a subsidiary ledger to the general ledger can help to detect errors or fraud.

Question 6

Within the conversion processes, systems and controls result from transactions that are:

A)Large volumes of daily materials transactions
B)Large volumes of daily sales and cash inflow transactions
C)Periodic
D)Infrequent

Question 7

In a manual system with proper segregation of duties, an employee in the general ledger department should only

A)Authorize posting to the general ledger
B)Post transactions to the general ledger
C)Reconcile the subsidiary ledger to the general ledger
D)Post transactions to the subsidiary ledger

Question 8

Which of the following statements is true?

A)Routine transactions are recorded in the general journal.
B)Nonroutine transactions are entered in the general journal.
C)Nonroutine transactions are recorded in a subsidiary ledger.
D)Nonroutine transactions are recorded in a special journal.

Question 9

Which of the following statements is true regarding internal controls of capital and investment processes?

A)Internal controls aimed at preventing and detecting employee fraud in capital and investment processes are not as effective.
B)Top management fraud, rather than employee fraud, is more likely to occur.
C)Any fraud is likely to involve manipulating capital and investment processes.
D)Because of top management oversight, the auditor need not review these processes.

Question 10

Which of the following statements regarding the authorization of general ledger posting is NOT true?

A)Posting to the general ledger always requires specific authorization.
B)User IDs and passwords can serve as authorization to post transactions to the general ledger.
C)A journal voucher serves as authorization for manual systems.
D)As IT systems become more automated, the authorization of general ledger posting is moved to lower levels of employees.

Question 11

Internal reports do not include:

A)Balance sheets
B)Sales reports
C)Cash flows
D)Inventory status reports

Question 12

Within the revenue and return processes, systems and controls result from transactions that are:

A)Large volumes of daily materials transactions
B)Large volumes of daily sales and cash inflow transactions
C)Periodic
D)Infrequent

Question 13

Raw material events can be found in which two processes?

A)(1) Revenue and return processes, systems & controls and (2) expenditures and return processes, systems & controls
B)(1) Expenditures and return processes, systems & controls and (2) conversion processes, systems & controls
C)(1) Conversion processes, systems & controls and (2) administrative processes, systems & controls
D)(1) Administrative processes, systems & controls and (2) revenue and return processes, systems & controls

Question 14

Payroll transactions are considered:

A)Large-volume daily events
B)Small-volume daily events
C)Periodic events
D)Intermittent or infrequent events

Question 15

The officer within a corporation that usually has oversight responsibility for investment processes is the

A)Controller
B)Treasurer
C)Chief executive officer (CEO)
D)Chief accounting officer (CAO)

Question 16

Within the administrative processes, systems and controls result from transactions that are:

A)Large volumes of daily materials transactions
B)Large volumes of daily sales and cash inflow transactions
C)Periodic
D)Infrequent or intermittent

Question 17

Capital or investment processes:

A)Are a regular and frequent event
B)Only require the specific approval of
C)Require the specific approval of top management or board of directors
D)Can be considered revenue since they result in cash inflows

Question 18

External reports do not include:

A)Balance sheets
B)Income statements
C)Sales reports
D)Cash flows

Question 19

Capital or investment processes:

A)Are a regular and frequent event
B)Do not require established procedures or internal controls due to their infrequency
C)Require established procedures and internal controls even though they are considered infrequent events
D)Do not involve the company's own bond issues

Question 20

Select the answer that contains only external reports:

A)Balance sheet, income statement, cash flow statement
B)Sales, balance sheet, income statement
C)Balance sheet, income statement, aged receivables
D)Sales, inventory, aged receivables

Question 21

Capital is/are the funds:

A)Utilized to acquire long-term and short-term or current assets
B)Received from customers from accounts receivable
C)Utilized to acquire long-term assets
D)That are cash inflows regardless of

Question 22

The transactions and resulting processes related to loans, bonds payable, and stock should be executed only when:

A)Received funds have been expended through the purchase of fixed assets.
B)The transactions are completed.
C)Top supervi
D)Top management or the board of directors authorize them.

Question 23

Items associated with debt do NOT include:

A)Interest
B)Maturity date
C)Dividends
D)Changes in stockholders’ equity

Question 24

Which of the following is NOT a special journal?

A)Sales journal
B)Inventory journal
C)Cash receipts journal
D)Payroll journal

Question 25

The decision to raise or acquire capital funds is:

A)Is the responsibility of contract stock underwriters
B)Is the responsibility of contract bond underwriters
C)Affects only bonds
D)Is the responsibility of the board of directors

Question 26

Investment processes:

A)Issue stock
B)Issue bonds
C)Purchase fixed assets
D)Invest excess funds

Question 27

Fraud associated with the capital and investment process is:

A)Generally the actions of the employees handling the cash as
B)Usually related to management fraud.
C)Prevented by the use of electronic funds transfers.
D)Usually not pursued by the Securities and Exchange Commission.

Question 28

The processes that authorize the raising of capital, execute the raising of capital, and properly account for that capital are called:

A)Capital-raising processes
B)
C)Administrative processes
D)Investment processes

Question 29

Select the correct statement from those listed below:

A)Issuance of bonds and the origination of loans are considered debt, while the issuance of stock is considered equity.
B)Issuance of bonds and the origination of loans are considered debt, while the issuance of stock is considered revenue.
C)Issuance of bonds, the origination of loans, and the issuance of stock are all considered debt.
D)Issuance of bonds, the origination of loans, and the issuance of stock are all considered equity.

Question 30

Equity is considered:

A)Bonds and loans with payment schedules several years in the future
B)Stocks
C)Loans with payment due in the near futur
D)All of the above are examples of long-term debt.

Question 31

Items associated with equity include all but:

A)Interest
B)Maturity date
C)Dividends
D)Changes in stockholders' equity

Question 32

The ________ _______ provide(s) details for all the account within the chart of accounts and are (is) the entire set of T-accounts for the organization.

A)Trial balance
B)Adjust entries
C)Financial statements
D)General ledger

Question 33

Special journals include:

A)Accounts receivable journal, cash receipts journal, payroll journal, purchases journal, and sales journal
B)Accounts payable journal, cash disbursements journal, payroll journal, purchases journal, and sales journal
C)Cash disbursements journal, cash receipts journal, general journal, payroll journal, purchases journal, and sales journal
D)Cash disbursements journal, cash receipts journal, payroll journal, purchases journal, and sales journal

Question 34

The proper sequence of events for the accounting cycle is:

A)Journalize, post, trial balance, adjusting entries, financial statements, and closing entries
B)Journalize, post, trial balance, adjusting entries, closing entries, and financial statements
C)Journalize, post, adjusting entries, trial balance, closing entries, and financial statements
D)Trial balance, adjusting entries, journalize, post, closing entries, and financial statements

Question 35

Select the answer that contains only internal reports:

A)Balance sheet, income statement, cash flow statement
B)Sales, balance sheet, income statement
C)Balance sheet, income statement, aged receivables
D)Sales, inventory, aged receivables

Question 36

Capital funds are acquired through the issuance of:

A)Bonds only
B)Stocks and/or bonds
C)Stocks only
D)Debt instruments only

Question 37

Select the true statement from those given below:

A)Capital processes require top management approval while investment processes only require treasurer approval.
B)Both the capital process and the investment process require only treasurer approval.
C)Both the capital process and the investment process require top management approval.
D)Neither the capital process nor the investment processes require top management approval.

Question 38

Corporations with complex IT systems:

A)May automate their investment process
B)Still handle all investment processes manually
C)Generally i
D)Cannot forecast surplus cash levels

Question 39

Which of the following, within the corporation, has the responsibility for making investment decisions?

A)Board of directors
B)Chief financial officer
C)Treasurer
D)President/CEO

Question 40

Long-term debt results from borrowing funds via:

A)Bonds and loans with payment schedules several years in the future
B)Stocks
C)Loans with payment due in the near future
D)All of the above are examples of long-term debt.

Question 41

Select the correct statement from the following.

A)To review purchases from a vendor, inspect the purchases journal; to review payments to a vendor, inspect the cash receipts journal.
B)To review purchases from a vendor and review payments to a vendor, inspect the cash disbursements journal.
C)To review the purchases from a vendor, inspect the purchases journal; to determine inventory levels of a specific item, inspect the subsidiary ledger for inventory.
D)To review the payments to a vendor, inspect the cash receipts journal; to determine inventory levels of a specific item, inspect the inventory journal.

Question 42

Corrections to posting errors are made:

A)Before the first trial balance
B)Only after the first trial balance
C)When discovered
D)Only when directed by top management

Question 43

Closing entries are:

A)Journalized in all of the special journals
B)Journalized in the general journal
C)Journalized in the subsidiary ledgers
D)Journalized in the general ledger

Question 44

Select the correct statement from the following:

A)If the trial balance debits equal the trial balance credits, adjusting entries are not necessary.
B)Adjusting entries are made after the adjusted trial balance report is printed.
C)Accounts payable information in detail can be found in both the general ledger and the accounts payable subsidiary ledger.
D)Financial statements must be prepared before the closing entries are journalized.

Question 45

Sales and sales returns can affect which journals?

A)Accounts receivable, accounts payable, inventory, and sales
B)Accounts receivable, cash, inventory, and sales
C)Accounts receivable, accounts payable, purchases, and inventory
D)Sales, cash receipts, cash disbursements, inventory, and purchases

Question 46

When a transaction occurs in a business, the accountant must decide if it is a regular and recurring transaction.If the transaction IS regular and recurring, it will be recorded in a ____1_____.If it is NOT regular and recurring, it will be recorded in a _____2_____.

A)1=General journal; 2=Special journal
B)1=General ledger: 2=Special ledger
C)1=Special journal; 2=General Journal
D)1=Special journal; 2=Subsidiary Ledger

Question 47

The sales journal would have columns for a

A)Debit to sales, a credit to accounts receivable
B)Debit to cash, a debit to accounts receivable, and a credit to sales
C)Debit to accounts receivable and a credit to cost of goods
D)Debit to accounts receivable and a credit to sales

Question 48

As computerized accounting systems get more and more complex and integrated:

A)The level of authorization for posting gets higher in the level of responsibilities.
B)The level of authorization for posting has not changed.
C)The level of authorization for posting gets lower in the level of responsibilities.
D)More levels of authorization are required.

Question 49

Posting to the general ledger occurs:

A)As the transaction is recorded in the special journals
B)Is not required if special journals are utilized
C)Automatically at the end of each business day
D)Only when proper authorization has been given

Question 50

Select the correct statement from the following:

A)The accounts payable journal will not show detail of purchases from a vendor.
B)Details of amounts owed by a customer in are the accounts payable journal.
C)The sales journal contains all sales information.
D)Details of amounts owed to a vendor are contained in the purchases journal.

Question 51

Today's automated accounting process:

A)Is built on a structure independent of manual accounting
B)Does not require special journals or subsidiary ledgers
C)Is built on an operational structure similar to manual accounting
D)Eliminates errors in the accounting process

Question 52

In the case of a manual accounting system, wages and payroll deductions would not be posted to the general ledger until the ________ forwards a signed journal voucher, giving the authorization.

A)Accounting manager
B)Controller
C)Payroll department
D)Upper management

Question 53

Special journals are:

A)Utilized for infrequent special journal entries
B)For regular and recurring transactions
C)Not utilized in automated accounting processes
D)Often the

Question 54

Subsidiary ledgers:

A)Would not contain the detailed information of a customer's account
B)Would contain the detailed information of a customer's account
C)Would contain only information related to secondary interests of the organization
D)Would not be utilized in automated accounting processes

Question 55

Closing entries:

A)Close all of the general ledger accounts
B)End the fiscal period
C)Close all of the subsidiary ledger accounts
D)Are journalized in the subsidiary ledgers

Question 56

When special journals are utilized:

A)A general journal is not required.
B)Segregation of duties is required.
C)A general journal is still utilized for infrequent and unique journal entries.
D)A general ledger is not required.

Question 57

Today's automated accounting process:

A)Helps the user by identifying modules for activities.
B)Precludes the use of subsidiary ledgers.
C)Requires manual posting of general journal transactions.
D)All of the above are correct.

Question 58

In automated accounting:

A)Paper vouchers are still required before the posting process is started.
B)Transaction information may be held in a special module awaiting posting.
C)General ledger accounts are updated as transactions are recorded in special journals.
D)Authorization is required for each specific transaction.

Question 59

Special journals include the:

A)Accounts receivable journal
B)Accounts payable journal
C)Purchases journal
D)Inventory journal

Question 60

Transactions are recorded in the special journals and subsidiary ledgers:

A)At the time of the transaction
B)Only when approved by top management
C)Only during the adjusting process
D)Only during the closing process

Question 61

Internal users:

A)Need more frequent reports than external users
B)Need more frequent reports than external users and utilize nonfinancial information in the planning and control of operations
C)Need more frequent reports than external users and need the same reports as external users to manage the operation
D)Utilize nonfinancial information in the planning and control of operations

Question 62

When transactions are posted in a computerized accounting system:

A)The user must post all transactions awaiting in the module.
B)Segregation of duties is not a factor.
C)The user can select which batches of transactions to post.
D)Anyone with general ledger access can post the transactions.

Question 63

Select the correct statement from those listed below:

A)Investors and creditors use nonfinancial feedback to evaluate business performance.
B)Internal managers need only nonfinancial feedback for proper planning and control of operations.
C)Internal managers need reports at the same frequency as external users.
D)Internal managers need much more frequent and detailed reports than external users.

Question 64

Select the correct statement from the following:

A)General ledger employees should not have custody of any assets that they record in the general ledger.
B)General ledger employees should never be given responsibility for authorizing any journal vouchers.
C)General ledger employees should only record journal vouchers that have been authorized by the appropriate manager.
D)All of the above are correct.

Question 65

While using a manual general ledger system, which of the following items would be included in the audit trail: general ledger, electronic images, journal vouchers, paper documents, source documents, special journals, and subsidiary ledgers?

A)All of those listed
B)Everything except electronic images
C)Everything except journal vouchers
D)Everything except

Question 66

The factor that does NOT affect internal reports is:

A)The type of organization
B)The audit status of the organization
C)The underlying function being managed
D)The time horizon

Question 67

IT controls over computer records and physical controls in general ledger storage areas minimize the related risk of:

A)Fraud and errors
B)Invalid general ledger postings
C)Theft and fraud
D)Amounts posted to wrong accounts

Question 68

Which of the following statements is FALSE?

A)As computerized accounting systems become more complex, there are usually fewer manual processes.
B)With more automation in computerized accounting systems, responsibility for authorization gets moved to lower levels of employees.
C)Approvals for each journal voucher are general authorizations instead of a specific authorization.
D)None of the above are false.

Question 69

The four general purpose financial statements are:

A)Generated at the end of each month
B)Generated at the end of each fiscal period
C)Distributed only to external users
D)Distributed only to internal users

Question 70

Segregation of duties:

A)Remains unchanged between computerized and manual accounting
B)May be more difficult in less complex computerized accounting systems
C)Is not a factor with computerized accounting systems
D)Is not a factor with manual accounting systems

Question 71

Financial statements:

A)Are generated from the values of the special journals and subsidiary ledgers
B)Are presented with complete chart of account detail
C)May contain condensed data from the general ledger
D)Show units in inventory and dollar value of those units

Question 72

Security of source documents:

A)Is essential for both manual general ledger systems and IT accounting systems
B)Is not a factor with IT accounting systems since the
C)Is not a factor with manual general ledger systems since they are printed documents in archive files
D)None of the options are correct.

Question 73

The external general purpose financial statements/reports include which of the following: aged accounts payable report, aged accounts receivable report, balance sheet, income statement, inventory statement, statement of cash flows, statement of retained earnings

A)All those listed
B)All those listed except for the inventory statement
C)Only balance sheet, income statement, statement of cash flows, and statement of retained earnings
D)Only aged accounts payable report, balance sheet, income statement, statement of cash flows, and statement of retained earnings

Question 74

Internal reports of financial information:

A)Are standardized by the AICPA
B)Are the same as those distributed to the external users
C)Vary by the user
D)Are distributed on the same time schedule as external reports

Question 75

Which of the following is not true with regards to internal controls in the general ledger process?

A)General ledger employees should never have custody of assets that they record in the general ledger.
B)A proper segregation of duties in a general ledger system is that general ledger functions should be segregated from special journal recording tasks.
C)A proper segregation of duties in a general ledger system is that general ledger functions should be segregated from subsidiary ledger tasks.
D)In a manual and automated accounting system, the same written authorization (signed sign off on a journal voucher) is required to process transactions in the general ledger.

Question 76

By maintaining a well-defined, complete chart of accounts, an organization minimizes the related risk of:

A)Fraud and errors
B)Invalid general ledger postings
C)Theft and fraud
D)Amounts posted to wrong accounts

Question 77

General ledger employees should record journal vouchers, but they should not:

A)Have recording responsibility for any special journals or subsidiary ledgers
B)Authorize journal vouchers
C)Have custody of assets
D)All of the above are correct.

Question 78

To maintain adequate records and documents in a manual general ledger system, there are two important requirements.These are:

A)A well-defined chart of accounts & adequate general ledger
B)An adequate audit trail & adequate internal controls
C)A well-defined chart of accounts & adequate audit trail
D)An adequate general ledger & adequate internal controls

Question 79

While using a computerized IT accounting system, which of the following items would be included in the audit trail: general ledger, electronic images, journal vouchers, paper documents, source documents, special journals, and subsidiary ledgers?

A)All of those listed
B)Electronic images and paper documents
C)Electronic images, paper documents,
D)General ledger, paper documents, special journals, and subsidiary ledgers

Question 80

Audit trails:

A)Can proceed only from the
B)Can proceed only from the journal entry to the
C)Are only utilized by the CPA auditors
D)Can be from the