Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Question
Chapter 7, Problem 1BE
To determine
Identify the each of the given statements relating to a) the control environment, b) control procedure, or c) monitoring .
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Internal Control Elements
Identify each of the following as relating to the control environment, control procedures, or monitoring:
1.
Hiring of external auditors to review the adequacy of controls
2.
Personnel policies
3.
Safeguarding inventory in a locked warehouse
Identify each of the following as relating to (a) the control environment, (b) control procedures, or (c) monitoring:1. Hiring of external auditors to review the adequacy of controls2. Personnel policies3. Safeguarding inventory in a locked warehouse
Internal controls do each of the following except:
A. Evaluate performance of employees
B. Guarantee the accuracy if account records
C. Protect assets
D. Increase the likelihood that any errors will be caught
Chapter 7 Solutions
Financial And Managerial Accounting
Ch. 7 - Prob. 1DQCh. 7 - Why should the employee who handles cash receipts...Ch. 7 - Prob. 3DQCh. 7 - Why should the responsibility for maintaining the...Ch. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - Prob. 8DQCh. 7 - Prob. 9DQCh. 7 - Prob. 10DQ
Ch. 7 - Prob. 1BECh. 7 - Prob. 2BECh. 7 - Prob. 3BECh. 7 - Prob. 4BECh. 7 - Prob. 5BECh. 7 - Sarbanes-Oxley internal control report Using...Ch. 7 - Prob. 2ECh. 7 - Prob. 3ECh. 7 - Prob. 4ECh. 7 - Prob. 5ECh. 7 - Prob. 6ECh. 7 - Prob. 7ECh. 7 - Prob. 8ECh. 7 - Prob. 9ECh. 7 - Prob. 10ECh. 7 - Prob. 11ECh. 7 - Entry for cash sales; cash short The actual cash...Ch. 7 - Entry for cash sales; cash over The actual cash...Ch. 7 - Prob. 14ECh. 7 - Prob. 15ECh. 7 - Prob. 16ECh. 7 - Prob. 17ECh. 7 - Prob. 18ECh. 7 - Prob. 19ECh. 7 - Prob. 20ECh. 7 - Prob. 21ECh. 7 - Prob. 22ECh. 7 - Prob. 23ECh. 7 - Prob. 24ECh. 7 - Prob. 1PACh. 7 - Prob. 2PACh. 7 - Prob. 3PACh. 7 - Prob. 4PACh. 7 - Prob. 5PACh. 7 - Prob. 1PBCh. 7 - Prob. 2PBCh. 7 - Prob. 3PBCh. 7 - Prob. 4PBCh. 7 - Prob. 5PBCh. 7 - Analyze and compare Amazon.com to Netflix...Ch. 7 - Analyze and compare J. C. Penney and Macys J. C....Ch. 7 - Prob. 3MADCh. 7 - Prob. 4MADCh. 7 - Analyze and compare Nike, lululemon, and Under...Ch. 7 - Ethics in Action Tehra Dactyl is an accountant for...Ch. 7 - Bank error During the preparation of the bank...Ch. 7 - Prob. 4TIFCh. 7 - Prob. 5TIF
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- Testing a company's internal controls through inspection of documents to see if approval or other checking was performed is specifically referred as ________. a. Documents Trial b. No Trial c. Audit Test d. Test of Controlsarrow_forwardKent manages the physical goods inventory in the warehouse and he also maintains the accounting records of the inventory held there. Which of the following internal control activities have been violated? A. Establishment of authorization B. Segregation of duties C. Documentation and record keeping procedures D. Checks on recorded amountsarrow_forwardAuthorization and Segregation of duties are the part of __________ a. Internal Control system b. Internal check system c. Internal audit system d. Internal Accountingarrow_forward
- Client Control Procedures and Audit Tests of Controls. Exhibit 7.64.1 contains an arrangement of examples of transaction errors (lettered a–g) and a set of client control procedures and devices (numbered 1–15).Required:For each client control procedure numbered 1–15, write a test of controls that could produce evidence on the question of whether the client’s control procedure has been implemented and is in operation.arrow_forwardWhen planning the audit of internal controls for an issuer, the audit team shoulda. Identify significant accounts, locations, and assertions.b. Conduct a walkthrough of the internal control process.c. Make inquiries of employees regarding the existence of control activities.d. Reperform control activities performed by client employees to determine theireffectiveness.arrow_forwardIdentify risks for potential fraud, stealing, or information exposure by reviewing the general ledger/journal numbers. Consider the following in your response: Determine whether established security procedures are being followed. Examine roles and access to data. Determine if approval paths meet the level of security for the task. Receiving Procedures Goods are delivered directly to the requesting office. The requestor receives the goods and packing slip. After the goods or services have been received the packing slip should be signed indicating receipt of goods and scanned and emailed to accounts payable. Approval Paths: Transactions Involving Purchase Orders Accounts payable receives the appropriate documentation from the pertinent department indicating goods and services have been received. A three-way match of the purchase order, invoice, and receiving document is performed and approved by accounts payable. Once approved by accounts payable, a payment voucher is created in…arrow_forward
- 1. The primary objective of internal controls in the expenditure cycle is to: A. Ensure the accuracy and completeness of financial transactions B. Streamline the procurement process C. Minimize the cost of purchases D. Increase the speed of payment processing 2. An example of a preventive control in the expenditure cycle is: A.Requiring management approval for large purchases B. Regular inventory counts C. Using firewalls and intrusion detection systems D. Conducting vendor audits 3. Which of the following is an example of a processing control in the expenditure cycle? A. Document sequencing B. Reconciling the bank statement C. Physical controls over inventory D. Approval of vendor invoices 4. Purchase orders are used to initiate a payment in the disbursement cycle.True False 5. An automated approval workflow for payment processing eliminates the need for managerial oversight and authorization. True or Falsearrow_forwardAuditing Sales/Revenue Transactions When an auditor needs to obtain an understanding of the overall internal control of a company, the auditor first needs to consider the elements of the control environment. To assist the auditor in assessing the level of control risk, the following tests of controls were designed to allow the auditor to determine if the company’s related controls were operating effectively in the revenue cycle. Determine which of the four management assertion(s) apply to each individual sales (revenue) control being discussed. Hint: many have more than one assertion. Management Assertions: Existence & Occurrence, Rights, Completeness, Valuation 6. Input validation checks (application controls) are applied to every bill to ensure the accuracy of the billing process.Which management assertions apply to this control?arrow_forwardAuditing Sales/Revenue Transactions When an auditor needs to obtain an understanding of the overall internal control of a company, the auditor first needs to consider the elements of the control environment. To assist the auditor in assessing the level of control risk, the following tests of controls were designed to allow the auditor to determine if the company’s related controls were operating effectively in the revenue cycle. Determine which of the four management assertion(s) apply to each individual sales (revenue) control being discussed. Hint: many have more than one assertion. Management Assertions: Existence & Occurrence, Rights, Completeness, Valuation 4. Years ago, the company purchased a software package that was used by other companies in the same industry (it was not specially made software). It was sold by a leading software company known for its highly-rated products. Which management assertions apply to this control?arrow_forward
- Auditing Sales/Revenue Transactions When an auditor needs to obtain an understanding of the overall internal control of a company, the auditor first needs to consider the elements of the control environment. To assist the auditor in assessing the level of control risk, the following tests of controls were designed to allow the auditor to determine if the company’s related controls were operating effectively in the revenue cycle. Determine which of the four management assertion(s) apply to each individual sales (revenue) control being discussed. Hint: many have more than one assertion. Management Assertions: Existence & Occurrence, Rights, Completeness, Valuation 5. The computer assigns a number to every sales invoice. Which management assertions apply to this control? 6. Input validation checks (application controls) are applied to every bill to ensure the accuracy of the billing process. Which management assertions apply to this control?…arrow_forwardWhich of the following is a device designed to help the audit team obtain evidence about theaccounting and control activities of an audit client?a. A narrative memorandum describing the control system.b. An internal control questionnaire.c. A flowchart of the documents and procedures used by the company.d. All of the abovearrow_forwardFrom a risk perspective, the PRIMARY objective for classifying data is: a) To ensure the completeness of the company's data inventory b) Establish appropriate control measures, depending upon the asset classification level. c) To support user account administration procedures. d) To limit access to personally identifiable informationarrow_forward
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