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module_14_problems.pdf

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Department
Administrative Studies
Course
ADMS 2500
Professor
All Professors
Semester
Fall

Description
Practice Problems PROBLEM 1MULTIPLE CHOICE 1Which of the following would not be a feature of a system of internal control over casha all cash receipts are deposited intact in the bank each day b all major disbursements are made by cheque c work and responsibilities of cash handling and recording are divided in such a way that errors are readily disclosed and the possibility of irregularities is reduced d insider trading is reported e none of the above 2 Startup is a very small businessEthel the accountant does all the accounting answers the phone and does the daily bank deposit in addition to working the sales deskA cost effective way for Startups owner to strengthen internal controls is to a segregate duties by insisting that Ethel not update accounts receivable records on the days she makes bank deposits b separate the recording and custody function by asking Ethel to list cash receipts as she opens the mail before preparing the bank deposit c open and review the mail himherselfd hire another accountant to check Ethels work e none of the above 3Recently a Canadian Public Accountability Board has been created to oversee and police auditors employed by Canadian publicly traded companies The Board will have 11 members including seven nonaccountantsThe Board will review accounting firms and it is hoped as a result investor and public confidence will be restored by giving Canadians the assurance of independent rigorous inspection of public company auditors David Brown chairman of Ontario Securities Commission as reported in the Toronto Star D1 July 18 2002The national inspection system this Board will oversee is expected to cost 6million a year and accounting firms will pay for the cost of the inspectionsAccounting firms would most likely be willing to pay for the cost of the inspections because a all accountants are rich b accounting is a selfregulating profession c with a system of inspections in place there will be no need for professional liability insurance d none of the above
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