ACC 409 - CHAPTER 3 EXAM QUESTIONS AND ANSWERS
WITH COMPLETE SOLUTIONS
1. The quality of an organization's internal controls affect which of the following?
a.
The reliability of financial data.
b.
The ability of management to make good decisions.
c.
The ability to remain in business.
d.
All of the above.
All of the above
2. Internal control is a process designed to achieve objectives in which one of the
following categories?
a.
Reliability of financial reporting.We could just undo those final steps
b.
Compliance with applicable laws.
c.
Ineffectiveness of operations.
,d.
Both A and B.
Reliability of financial reporting.We could just undo those final steps and Compliance
with appliance laws
3. Which of the following is not a reason that the auditor must gain an
understanding of the client's internal control system?
a.
Better understand the client, its risks, and how it manages those risks.
b.
Assess control risk and identify the types of financial statement misstatements
that are most likely to occur.
c.
Plan direct tests of account balances to determine if misstatements have
occurred.
d.
All are reasons why auditors must gain an understanding of the client's internal
control system.
All are reasons why auditors must gain an understanding of the client's internal control
system.
4. Which one of the following groups is interested in an organization's control
structure?
a.
Board members.
, b.
Lenders.
c.
Auditors. or
d.
All of the above.
All of the above
5. With whom does the tone of internal control typically originate?
a.
Auditors.
b.
Employees.
c.
Management.
d.
Stockholders.
Management
6. Which of the following is not a major components of an organization's internal
control structure?
a.
Control risk.
b.
The control environment.
WITH COMPLETE SOLUTIONS
1. The quality of an organization's internal controls affect which of the following?
a.
The reliability of financial data.
b.
The ability of management to make good decisions.
c.
The ability to remain in business.
d.
All of the above.
All of the above
2. Internal control is a process designed to achieve objectives in which one of the
following categories?
a.
Reliability of financial reporting.We could just undo those final steps
b.
Compliance with applicable laws.
c.
Ineffectiveness of operations.
,d.
Both A and B.
Reliability of financial reporting.We could just undo those final steps and Compliance
with appliance laws
3. Which of the following is not a reason that the auditor must gain an
understanding of the client's internal control system?
a.
Better understand the client, its risks, and how it manages those risks.
b.
Assess control risk and identify the types of financial statement misstatements
that are most likely to occur.
c.
Plan direct tests of account balances to determine if misstatements have
occurred.
d.
All are reasons why auditors must gain an understanding of the client's internal
control system.
All are reasons why auditors must gain an understanding of the client's internal control
system.
4. Which one of the following groups is interested in an organization's control
structure?
a.
Board members.
, b.
Lenders.
c.
Auditors. or
d.
All of the above.
All of the above
5. With whom does the tone of internal control typically originate?
a.
Auditors.
b.
Employees.
c.
Management.
d.
Stockholders.
Management
6. Which of the following is not a major components of an organization's internal
control structure?
a.
Control risk.
b.
The control environment.
