BT-17 to 27

Internal and external auditors provide assurance roles in business.

Which of the following statements are TRUE regarding the external auditors?

1. 1. The external auditors should provide assurance to the audit committee, the board of directors, senior management or possibly shareholders

2. 2. The external auditors should be independent from the company and its management

3. 3. The external auditors need not be professionally qualified accountants

4. 4. The external auditors should provide information for the benefit of the shareholders of the company

• 1. 2 only

• 1. 1 and 2 only

• 1. 2 and 4 only

• 1. 1, 2, 3 and 4

The chief internal auditor should report directly to the ____________

Which of the following phrases completes the sentence above?

• 1. Management accountant

• 1. Chief Financial Officer (CFO)

• 1. External Auditor

• 1. Audit Committee

The internal audit function of an organisation is provided in house with the internal auditors employed directly by the organisation.

Which of the following statements is true?

• 1. It is inappropriate for the internal audit team to be direct employees as this compromises their independence

• 1. The chief internal auditor should report to an executive manager for day-to-day administration purposes

• 1. Internal audit is a legal requirement for all commercial organisations

• 1. Internal auditors report on the truth and fairness of the financial statements

Budgets play an important role in management accounting reports.

Which of the following activities best describes budgetary control?

• 1. Writing off money owed to the business when a customer is not going to pay

• 1. The system of preparing budgets and producing regular control reports for management

• 1. Reducing the cost of material waste in production

• 1. Calculating the volume of sales required to generate for the year

An organisation reduces the credit terms it offers to customers. This will have which of the following effects on the receivables and cash levels of the business?

• 1. Receivables will decrease, cash will increase

• 1. Receivables will decrease, cash will decrease

• 1. Receivables will increase, cash will decrease

• 1. Receivables will increase, cash will increase

The marketing department in a major building materials supply company needs information on product profit margins before executing a new pricing strategy.

Who in the company would investigate and provide this information?

• 1. Treasury department

• 1. Financial accountant

• 1. Management Accountant

• 1. Bookkeeper

A construction company has a large marketing department that negotiates contracts with customers.

In which one of the following ways might accountants in the company assist the marketing management?

• 1. Recommend when the construction jobs should be done

• 1. Negotiate financing arrangements for the customer with the customer’s bank

• 1. Decide on a price for each contract

• 1. Estimate the time and resources needed to complete the work

Which of the given accounting information would be valuable to the production manager?

• 1. Interest expense paid.

• 1. Calculation of expected demand based on a range of prices.

• 1. Value of non-current assets used in manufacturing.

• 1. Calculation of a predetermined overhead absorption rate.

Accountants can assist in the procurement function in a number of ways.

Which of the following statements describe how accountants can help the procurement function?

1. 1. Obtaining the lowest purchasing price

2. 2. Comparing planned costs to actual costs

3. 3. Arranging payment to suppliers by the required time

4. 4. Producing short-term cash budget

• 1. 2 and 3 only

• 1. 1 and 4 only

• 1. 4 only

• 1. 1, 2, 3, and 4

Companies are required to comply with a number of legal requirements. One of these is that they should file annual financial statements and other statutory information with the national Companies Registry.

Which of the following outcomes is most likely if a company fails to file their accounting statements?

• 1. A fine or penalty would be incurred

• 1. The external auditors would not be able to provide an opinion

• 1. The external auditors would be forced to qualify the accounts

• 1. The prior year’s statements would be filed in place of the accounts by the Companies Registry as an emergency measure until the correct statements can be provided