#1
Which of the following is a fundamental accounting equation?
Assets = Liabilities + Equity
ExplanationDescribes the relationship between a company's assets, liabilities, and equity.
#2
What is the primary objective of internal control in accounting?
To prevent fraud and errors
ExplanationAims to safeguard assets and ensure accurate financial reporting by minimizing fraud and errors.
#3
Which financial statement provides information about a company's financial position at a specific point in time?
Balance sheet
ExplanationSummarizes a company's assets, liabilities, and equity at a specific moment, offering a snapshot of its financial position.
#4
Which of the following is an example of an internal control procedure?
Reconciling bank statements monthly
ExplanationInvolves regular verification to identify discrepancies and errors in financial records.
#5
What is the purpose of segregation of duties in internal control?
To prevent any single individual from having control over all aspects of a transaction
ExplanationDistributes responsibilities to avoid concentration of power and reduce the risk of fraud.
#6
What is the purpose of the accounting cycle?
To record business transactions in chronological order
ExplanationSystematic process of recording, classifying, and summarizing financial transactions in chronological order.
#7
Which of the following is an example of a preventive internal control?
Implementing password policies
ExplanationAims to stop potential issues before they occur, such as restricting unauthorized access through password policies.
#8
Which of the following is a characteristic of an effective internal control system?
Regularly monitoring and reviewing control procedures
ExplanationInvolves ongoing assessment and adjustment of control measures to ensure their effectiveness.
#9
Which principle of internal control suggests that transactions should be authorized by appropriate personnel?
Establishment of responsibility
ExplanationAssigning responsibility for transactions to specific individuals to ensure accountability and authorization.