Tag: Ethics

For each of the two statements about the information system in a company, select whether they are true or false.

Example 1 – The information system comprises only the IT system of a company.

Example 2 – The information system includes the process of preparing the financial statements, such as the production of journals.

Select ONE answer:

1. Example 1. False and Example 2. False
2. Example 1. False and Example 2. True
3. Example 1. True and Example 2. False
4. Example 1. True and Example 2. True

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 =>  The information system comprises all the information (be it in hardcopy or electronic form) that flows into the financial statements and includes the whole process of financial statement preparation.
3. Not correct
4. Not correct

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Which ONE of the following is not part of an entity’s risk assessment process?

Select ONE answer:

1. Report the process to the auditors
2. Identify relevant business risks
3. Estimate the impact of risks
4. Assess the likelihood of occurrence

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 => Reporting the process to the auditors is part of the external audit process and not part of the internal risk assessment process.
2. Not correct
3. Not correct
4. Not correct

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

For each of the following internal controls, which is the principal limitation?

• Segregation of duties in a sales system

Select ONE answer:

1. Management override
2. Lack of Stakeholder Engagement With Reporting
3. Human error
4. Collusion

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 => Even where duties are segregated, this control can be overridden by the collusion of the parties involved.

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

For each of the following internal controls, which is the principal limitation?

• The preparation of a bank reconciliation

Select ONE answer:

1. Management override
2. Lack of Stakeholder Engagement With Reporting
3. Human error
4. Collusion

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 => For the preparation of reconciliations where calculations are involved, the inherent limitation is that these reconciliations are susceptible to human error.
4. Not correct

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

According to ISA (UK) 315, which one of the following is not an aspect of an entity’s control environment?

Select ONE answer:

1. The attitude of the directors to internal controls
2. The attitude of staff to internal controls
3. The awareness of internal control issues in the company
4. The actions of senior management in relation to internal controls

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 =>   it is the attitude of management and senior staff that will shape the entity’s control environment and not that of the ordinary staff.
3. Not correct
4. Not correct

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