The Multiple Choice Questions Blog

Which ONE of the following deficiencies identified in the purchase system of Alex Manufacturing Ltd could result in a misstatement of liabilities?

Select ONE answer:

1. The buying department does not always use authorised suppliers
2. Alex Manufacturing Ltd does not always take advantage of prompt payment discounts.
3. Purchase invoices are matched with goods received notes
4. The payables ledger is not reconciled to the payables ledger control account

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – Control account reconciliations help to identify posting errors. Options 1 and 2 are control deficiencies that do not result directly in the misstatement of liabilities.

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The following is an example of a deficiency in Alex Manufacturing Ltd.’s purchase system.

For the example below, select the type of internal control activity which would improve the purchase system.

• There has been an increase in theft from the main distribution centre.

Select ONE answer:

1. Authorisation
2. Information processing
3. Physical controls
4. Performance Review

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct – Physical security measures should reduce risk of theft.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

The following is an example of a deficiency in Alex Manufacturing Ltd.’s purchase system.

For the example below, select the type of internal control activity which would improve the purchase system.

• Errors have been made in calculating discounts receivable.

Select ONE answer:

1. Authorisation
2. Information processing
3. Physical controls
4. Performance Review

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct – Checking arithmetical accuracy is an information processing control.
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

The following process describes aspects of the sales system in operation at Alex plc:

For the process, select whether it represents a big strength, a big deficiency, a minor impact or no impact on the system.

• The condition of the returned goods is checked, and a goods returned note is issued. A copy of this is sent to the accounts department, and the chief accountant raises a credit note.

Select ONE answer:

1. a big strength
2. a minor impact
3. no impact
4. a big deficiency

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

The following process describes aspects of the sales system in operation at Alex plc:

For each process, select whether it represents a major strength, a significant deficiency, a minor impact, or no impact on the system.

• The receivables ledger clerk posts the sales invoices and cash received to the receivables’ ledger. The receivables ledger clerk also reconciles the receivables ledger to the control account monthly.

Select ONE answer:

1. a minor impact
2. no impact
3. a major strength
4. a significant deficiency

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – In this process there is insufficient segregation of duties. The same individual should not be responsible for processing invoices, posting cash and performing the control account reconciliation.

This work is licensed under a Creative Commons Attribution 4.0 International License.