Tag: Accounting

Which ONE of the following reduces password effectiveness?

Select ONE answer:

1. User selection of passwords
2. Frequent changes of passwords
3. Automatic disconnection after failed attempts to access the system
4. Disciplinary offence if passwords are revealed

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 => User selection of passwords would reduce password effectiveness. The existence of frequent changes of passwords, automatic disconnection after failed attempts and disciplinary offences if passwords are revealed would all increase password effectiveness.
2. Not correct
3. Not correct
4. Not correct

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Most entities or businesses make use of IT systems for financial reporting and operational purposes.

Controls operating in an IT environment can be split into general controls and application controls.

Which ONE of the following is an application control?

Select ONE answer:

1. Use of passwords
2. Testing of new systems
3. Disaster recovery plan
4. Authorisation of data for input

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 => Application controls apply to the processing of individual applications (eg, sales, purchases, inventory), hence authorisation of data for input (say of purchase orders) is the application control. The remaining options are general controls, which relate to many applications and support the operation of the whole IT environment.

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The following is an example of an internal control which operates at Big Staffie plc.

In each example, select which control activity is illustrated:

– The finance director compares monthly expenditure on consumables to the budgeted expenditure.

Select ONE answer:

1. Information processing
2. Authorisation
3. Performance review
4. Segregation of duties

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 => Performance review includes reviews and analyses of actual performance against budgets, forecasts and prior period performance.
4. Not correct

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

The following is an example of an internal control which operates at Big Staffie plc.

In each example, select which control activity is illustrated:

– The financial accountant signs the bank reconciliation, which was prepared by a member of his staff.

Select ONE answer:

1. Information processing
2. Authorisation
3. Performance review
4. Segregation of duties

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 =>   Authorisation showing that the accountant has reviewed the reconciliation.
3. Not correct
4. Not correct

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

ISA (UK) 315 states that an internal control system in an organisation consists of five components:

• the control environment
• the entity’s risk assessment process
• the information system
• the control activities
• the monitoring of controls

For each of the following examples, select the component which it illustrates:

-Review by management of monthly bank reconciliations

Select ONE answer:

1. the monitoring of controls
2. the control activities
3. the entity’s risk assessment process
4. the control environment

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 =>   Monitoring of controls involves reviewing the effectiveness of controls and whether they need improvement; thus, management’s review of monthly bank reconciliations is part of that monitoring system.
2. Not correct
3. Not correct
4. Not correct

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