ACC 231 ASU EXAM 2 – QUESTIONS AND ANSWERS | VERIFIED AND WELL
DETAILED ANSWERS | PLUS RATIONALES | GUARANTEED PASS | LATEST EXAM
UPDATE
*Core Domains*
*Internal Control Systems*
*Cash and Internal Controls*
*Receivables and Uncollectibles*
*Inventory Cost Flow Methods*
*Periodic and Perpetual Systems*
*Lower of Cost or Market (LCM)*
*Fraud and Ethics in Accounting*
*Bank Reconciliations*
*Introduction*
This comprehensive assessment is designed to evaluate mastery of financial accounting
principles central to the second module of the curriculum. The exam focuses on the
mechanics of reporting and safeguarding assets, with a specific emphasis on inventory
valuation, the management of receivables, and the implementation of robust internal
controls. Through a combination of foundational theory and complex scenario-based
inquiries, candidates must demonstrate proficiency in selecting appropriate accounting
,methods and applying regulatory standards to real-world financial data. This assessment
ensures that students possess the analytical skills necessary for ethical decision-making
and accurate financial reporting in a professional business environment.
SECTION ONE
1. Which of the following is not one of the three components of the fraud triangle?
A. Rationalization
B. Pressure
C. Opportunity
D. Collusion
🟢 D. Collusion
🔴 Explanation: The fraud triangle consists of three factors that contribute to fraudulent
activity: opportunity, financial pressure, and rationalization. Collusion involves two or more
people working together to circumvent controls but is not a component of the triangle
itself.
2. What is the primary objective of the Sarbanes-Oxley Act (SOX)?
,A. To mandate the use of the LIFO inventory method
B. To reduce unethical corporate behavior and decrease the likelihood of future corporate
scandals
C. To eliminate the need for independent outside auditors
D. To provide a framework for the direct write-off method of accounting
🟢 B. To reduce unethical corporate behavior and decrease the likelihood of future
corporate scandals
🔴 Explanation: SOX was enacted to restore public confidence in corporate financial
reporting by requiring management to take responsibility for internal controls and ensuring
independent audits.
3. Which internal control principle is being violated if the same person opens incoming
mail and records the cash receipts in the accounting records?
A. Establishment of responsibility
B. Independent internal verification
C. Segregation of duties
D. Human resource controls
🟢 C. Segregation of duties
, 🔴 Explanation: Segregation of duties requires that different individuals should be
responsible for related activities, specifically keeping the record-keeping separate from
the physical custody of an asset.
4. Internal auditors are:
A. Employees of the company who evaluate the effectiveness of the company’s system of
internal controls
B. Independent CPAs hired to provide an opinion on the fairness of financial statements
C. Government employees who ensure compliance with tax laws
D. Shareholders who review the company's annual report
🟢 A. Employees of the company who evaluate the effectiveness of the company’s
system of internal controls
🔴 Explanation: Internal auditors are company employees who continuously monitor and
evaluate the control environment to ensure policies are followed and assets are protected.
5. When a company uses a petty cash fund, the "Petty Cash" account is debited when:
A. The fund is being replenished
B. Management decides to increase the size of the fund
DETAILED ANSWERS | PLUS RATIONALES | GUARANTEED PASS | LATEST EXAM
UPDATE
*Core Domains*
*Internal Control Systems*
*Cash and Internal Controls*
*Receivables and Uncollectibles*
*Inventory Cost Flow Methods*
*Periodic and Perpetual Systems*
*Lower of Cost or Market (LCM)*
*Fraud and Ethics in Accounting*
*Bank Reconciliations*
*Introduction*
This comprehensive assessment is designed to evaluate mastery of financial accounting
principles central to the second module of the curriculum. The exam focuses on the
mechanics of reporting and safeguarding assets, with a specific emphasis on inventory
valuation, the management of receivables, and the implementation of robust internal
controls. Through a combination of foundational theory and complex scenario-based
inquiries, candidates must demonstrate proficiency in selecting appropriate accounting
,methods and applying regulatory standards to real-world financial data. This assessment
ensures that students possess the analytical skills necessary for ethical decision-making
and accurate financial reporting in a professional business environment.
SECTION ONE
1. Which of the following is not one of the three components of the fraud triangle?
A. Rationalization
B. Pressure
C. Opportunity
D. Collusion
🟢 D. Collusion
🔴 Explanation: The fraud triangle consists of three factors that contribute to fraudulent
activity: opportunity, financial pressure, and rationalization. Collusion involves two or more
people working together to circumvent controls but is not a component of the triangle
itself.
2. What is the primary objective of the Sarbanes-Oxley Act (SOX)?
,A. To mandate the use of the LIFO inventory method
B. To reduce unethical corporate behavior and decrease the likelihood of future corporate
scandals
C. To eliminate the need for independent outside auditors
D. To provide a framework for the direct write-off method of accounting
🟢 B. To reduce unethical corporate behavior and decrease the likelihood of future
corporate scandals
🔴 Explanation: SOX was enacted to restore public confidence in corporate financial
reporting by requiring management to take responsibility for internal controls and ensuring
independent audits.
3. Which internal control principle is being violated if the same person opens incoming
mail and records the cash receipts in the accounting records?
A. Establishment of responsibility
B. Independent internal verification
C. Segregation of duties
D. Human resource controls
🟢 C. Segregation of duties
, 🔴 Explanation: Segregation of duties requires that different individuals should be
responsible for related activities, specifically keeping the record-keeping separate from
the physical custody of an asset.
4. Internal auditors are:
A. Employees of the company who evaluate the effectiveness of the company’s system of
internal controls
B. Independent CPAs hired to provide an opinion on the fairness of financial statements
C. Government employees who ensure compliance with tax laws
D. Shareholders who review the company's annual report
🟢 A. Employees of the company who evaluate the effectiveness of the company’s
system of internal controls
🔴 Explanation: Internal auditors are company employees who continuously monitor and
evaluate the control environment to ensure policies are followed and assets are protected.
5. When a company uses a petty cash fund, the "Petty Cash" account is debited when:
A. The fund is being replenished
B. Management decides to increase the size of the fund
