Tag: Professional Accountant

For each of the following statements, select whether they are true or false in respect of the limitations of a system of internal control:

A – Internal controls are only applied to material items.
B – Standard controls may not be designed to deal with unusual transactions.

Select ONE answer:

1. Statement A – False, and Statement B – False
2. Statement A – True, and Statement B – False
3. Statement A – True, and Statement B – True
4. Statement A – False, and Statement B – 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 4

1. Not correct
2. Not correct
3. Not correct
4. Correct => Statement A is false – internal controls should be applied equally to all transactions, whether material or not.

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

For each of the following statements, select whether they are true or false in respect of the limitations of a system of internal control:

A – The cost of implementing controls may be more expensive than the cost of any potential risk arising.
B – The effectiveness of many controls relies on the integrity of those applying them.

Select ONE answer:

1. Statement A – False, and Statement B – False
2. Statement A – True, and Statement B – False
3. Statement A – True, and Statement B – True
4. Statement A – False, and Statement B – 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 3

1. Not correct
2. Not correct
3. Correct => Both statements are true
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 of actual performance against the budget

Select ONE answer:

1. the control environment
2. the control activities
3. the entity’s risk assessment process
4. the monitoring of 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 => Review of actual performance versus budget is a control activity.
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:

– Training programme for all staff

Select ONE answer:

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

1. Correct => A training programme for all staff is part of the control environment.
2. Not correct
3. Not correct
4. Not correct

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

With regards to internal control systems in small entities, select whether each of the following statements is true or false:

A – Smaller companies are more likely to be successful in the implementation of segregation of duties controls
B – Management override is more likely to take place in smaller companies.

Select ONE answer:

1. Statement A – True, and Statement B – True
2. Statement A – False, and Statement B – False
3. Statement A – True, and Statement B – False
4. Statement A – False, and Statement B – 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 4

1. Not correct
2. Not correct
3. Not correct
4. Correct => Small companies are less likely to be successful in the implementation of segregation of duties controls due to the limited number of employees available to segregate specific tasks within the various cycles. Given the limited number of staff in small companies and the dominance of management, controls are more likely to be overridden in smaller companies than larger ones.

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