MODULE 1 ASSESMENT

The quality of accounting information that provides users of Financial Statements with the assurance that the information is free of error and bias is

• consistency

• relevance

• verifiability

• reliability

Internal controls are used in business to

• produce correct financial statements and deter employee dishonesty

• enhance the accuracy and reliability of accounting records and prevent fraud

• establish responsibility and conduct independent checks on employee performance

• safeguard business assets and enhance the accuracy and reliability of accounting records

What would be the advantage of having all countries adopt and follow the same accounting standards?

• Comparability

• Consistency

• Absorbed preparation costs

• Eliminating the need for external auditing

Which of the following can be considered physical controls in an accounting environment?

I. Safes and vaults

II. Locked warehouses for inventories

III. Bank safety deposit boxes

• I and II ONLY

• i and III ONLY

• II and III ONLY

• I, II, III

One clerk is responsible for keeping inventory and another for receiving and issuing inventory items. This is an example of

• division of labour

• segregation of duty

• monitoring inventory levels

• inventory valuation

An internal control system is necessary for

I. safeguarding assets

II. segregation of duties

III. reducing the risk of errors

IV. ensuring the reliability of accounting records

• I, II and III only

• I, II and IV only

• I, III and IV only

• II, III and IV only

Identify the objectives of the control system in an organisation.

• To identify the social and ethical issues in financial reporting.

• To comply with company's policies, regulations and government laws

• To provide reasonable assurance that the company's goals and objectives are achieved

• to discourage occurrence of errors and irregularities

• To assess the operating effectiveness of the organisation and its structure

State the seven general principles of Internal Controls.

From the list below identify those controls that fall under Administrative controls

• Segregation of duties

• Adequate documentation

• Independent internal verification

• Proper authorisation

• Competent personnel with clear responsibilities

Identify the controls that are considered to be Accounting controls from the list below.

• Other controls (Rotation of employees)

• Physical safeguard of assets

• Adequate documentation

• Competent personnel with clear responsibilities

• Segregation of duties