Chapter 9: Internal controls II
Multiple-choice questions
1. After identifying risks, management will decide on appropriate policies and
procedures to address the risks. These policies and procedures are called:
a. control policies.
b. control activities.
c. control procedures.
d. control processes.
Correct answer: b
Learning objective 9.1 – explain the importance of control activities in the accounting
process.
2. The comparison of actual and budgeted figures and the conduct of variance analysis
to determine the source of the variance is a type of:
a. general control.
b. information processing control.
c. performance review.
d. application control.
Correct answer: c
Learning objective 9.2 – evaluate internal controls as general or application.
3. Information processing controls are those that are put in place within the organisation
to work towards the _______ of transactions.
a. efficiency, effectiveness and accuracy
b. timeliness, efficiency and completeness
c. accuracy, completeness and authorisation
d. authorisation, processing and accuracy
Correct answer: c
Learning objective 9.2 – evaluate internal controls as general or application.
, Chapter 9: Internal controls II
4. Internal controls are necessary in all businesses because:
a. business processes do not always go to plan.
b. employees are basically corrupt.
c. financial statements only contain assertions.
d. external auditors insist on them.
Correct answer: a
Learning objective 9.1 – explain the importance of control activities in the accounting
process.
5. Which of the following is a risk to the financial statement of a company when it
places a purchase order with a supplier?
a. The supplier delivers the goods with an invoice instead of a delivery note.
b. The goods are not available.
c. The supplier delivers the wrong goods or wrong quantity.
d. The purchasing officer orders the wrong goods.
Correct answer: c
Learning objective 9.1 – explain the importance of control activities in the accounting
process.
6. An antivirus program scans and monitors files in a computer continuously for viruses.
This is an example of:
a. preventive control.
b. detective control.
c. corrective control.
d. application control.
Correct answer: b
Learning objective 9.2 – evaluate internal controls as general or application.
7. Checking customer details before finalising a sales order is an example of a ________
control.
a. input
b. general
c. processing
d. performance
Correct answer: a
Learning objective 9.2 – evaluate internal controls as general or application.
9.1
, 8. A computer virus is found in a file in the computer system. Because a solution for
recovering the file is not yet available, the infected file is quarantine by the antivirus
software. Quarantining the infected file is an example of:
a. preventive control.
b. detective control.
c. corrective control.
d. none of the options are correct.
Correct answer: a
Learning objective 9.2 – evaluate internal controls as general or application.
9. Which of the following is not a type of controls classified in the Australian Auditing
Standard ASA 315?
a. Authorisation.
b. Performance review.
c. Risk control.
d. Segregation of duties.
Correct answer: c
Learning objective 9.2 – evaluate internal controls as general or application.
10. Which aspect of document collection are pre-numbered documents used to establish?
a. Input data is accurate.
b. Data from source documents is recorded in a timely manner.
c. All source documents are accounted for.
d. All source documents have been authorised.
Correct answer: c
Learning objective 9.2 – evaluate internal controls as general or application.
9.2
Multiple-choice questions
1. After identifying risks, management will decide on appropriate policies and
procedures to address the risks. These policies and procedures are called:
a. control policies.
b. control activities.
c. control procedures.
d. control processes.
Correct answer: b
Learning objective 9.1 – explain the importance of control activities in the accounting
process.
2. The comparison of actual and budgeted figures and the conduct of variance analysis
to determine the source of the variance is a type of:
a. general control.
b. information processing control.
c. performance review.
d. application control.
Correct answer: c
Learning objective 9.2 – evaluate internal controls as general or application.
3. Information processing controls are those that are put in place within the organisation
to work towards the _______ of transactions.
a. efficiency, effectiveness and accuracy
b. timeliness, efficiency and completeness
c. accuracy, completeness and authorisation
d. authorisation, processing and accuracy
Correct answer: c
Learning objective 9.2 – evaluate internal controls as general or application.
, Chapter 9: Internal controls II
4. Internal controls are necessary in all businesses because:
a. business processes do not always go to plan.
b. employees are basically corrupt.
c. financial statements only contain assertions.
d. external auditors insist on them.
Correct answer: a
Learning objective 9.1 – explain the importance of control activities in the accounting
process.
5. Which of the following is a risk to the financial statement of a company when it
places a purchase order with a supplier?
a. The supplier delivers the goods with an invoice instead of a delivery note.
b. The goods are not available.
c. The supplier delivers the wrong goods or wrong quantity.
d. The purchasing officer orders the wrong goods.
Correct answer: c
Learning objective 9.1 – explain the importance of control activities in the accounting
process.
6. An antivirus program scans and monitors files in a computer continuously for viruses.
This is an example of:
a. preventive control.
b. detective control.
c. corrective control.
d. application control.
Correct answer: b
Learning objective 9.2 – evaluate internal controls as general or application.
7. Checking customer details before finalising a sales order is an example of a ________
control.
a. input
b. general
c. processing
d. performance
Correct answer: a
Learning objective 9.2 – evaluate internal controls as general or application.
9.1
, 8. A computer virus is found in a file in the computer system. Because a solution for
recovering the file is not yet available, the infected file is quarantine by the antivirus
software. Quarantining the infected file is an example of:
a. preventive control.
b. detective control.
c. corrective control.
d. none of the options are correct.
Correct answer: a
Learning objective 9.2 – evaluate internal controls as general or application.
9. Which of the following is not a type of controls classified in the Australian Auditing
Standard ASA 315?
a. Authorisation.
b. Performance review.
c. Risk control.
d. Segregation of duties.
Correct answer: c
Learning objective 9.2 – evaluate internal controls as general or application.
10. Which aspect of document collection are pre-numbered documents used to establish?
a. Input data is accurate.
b. Data from source documents is recorded in a timely manner.
c. All source documents are accounted for.
d. All source documents have been authorised.
Correct answer: c
Learning objective 9.2 – evaluate internal controls as general or application.
9.2
