Practice Multiple Choice Questions for Test1

Practice Multiple Choice Questions for Test1 - Practice...

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Practice Multiple Choice Questions for Payroll, Sales and Collections, Acquisitions and Payment Processes 1. The internal auditor is reviewing shipping procedures of a manufacturing company. The auditor should be greatly concerned when a. merchandise is shipped without an approved customer’s order. b. invoiced prices on merchandise are not checked before the orders are shipped. c. the sales department is not promptly notified when merchandise is shipped. d. only one quotation on transportation costs is obtained. e. transportation tariffs are not checked before merchandise is shipped. 2. Which of the following is an effective internal accounting control over accounts receivable? a. Only people who handle cash receipts should be responsible for preparing documents that reduce accounts receivable balances. b. Responsibility for approval of the write off of uncollectable accounts receivable should be assigned to the cashier. c. Balances in the subsidiary accounts receivable ledger should be reconciled to the general ledger control account once a year, preferably at year end. d. The billing function should be assigned to people other than those responsible for maintaining accounts receivable subsidiary records. 3. Which of the following would be the best protection for a company that wishes to prevent the “lapping” of trade accounts receivable? a. Segregate duties so that the bookkeeper in charge of the general ledger has no access to incoming mail. b. Segregate duties so that no employee has access to both checks from customers and currency from daily cash receipts. c. Have customers send payments directly to the company’s depository bank. d. Request that customers’ payment checks be made payable to the company and addressed to the treasurer. 4. Matching the supplier’s invoice, the purchase order, and the receiving report normally should be the responsibility of the a. warehouse receiving function b. purchasing function c. general accounting function d. treasury function 5. To avoid potential errors and irregularities, a well designed system of internal accounting control in the accounts payable area should include a separation of which of the following functions? a. cash disbursements and vendor invoice verification b. vendor invoice verification and merchandise ordering c. physical handling of merchandise received and preparation of receiving reports d. check signing and cancelation of payment documentation 6. It would be appropriate for the payroll accounting department to be responsible for which of the following functions? a. approving employee time records b. maintaining records of employment, discharges, and pay increases c. preparing periodic government reports as to employees’ earnings and withholding taxes d. temporarily retaining unclaimed employee paychecks 7. Jackson, the purchasing agent of Judd Hardware Wholesalers, has a relative who owns a retail hardware store. Jackson arranged for hardware to be delivered by manufacturers to the retail store on
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Practice Multiple Choice Questions for Test1 - Practice...

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