Reference no: EM132718708

Problem 1. Which of the following would most likely suggest that a company have overvalued inventory?

A. A rising current ratio, a stable liquid ratio and increasing days in inventory

B. A falling current ratio, a rising liquid ratio and increasing day inventory

C. A rising current ratio, a rising liquid ratio and decreasing day inventory

D. A falling current ratio, a rising liquid ratio and decreasing day inventory

Problem 2. Which of the following internal controls will be most effective in reducing the risk of error arising from paying suppliers twice for the same purchase?

A. Approval of invoices prior to posting to the accounts payable system.

B. Stamping of the supplier invoices as "Paid"

C. Performance of a monthly accounts receivable reconciliation

D. Matching of goods dispatch notes to purchase invoices

Problem 3. Which of the following internal controls will be most effective in reducing the risk of error arising from failure to record transaction?

A. A bank reconciliation which is prepared and reviewed on a monthly basis

B. Inspection of sales invoices for evidence of approval

C. A stocktake whereby client staff reconcile the inventory ledger to the physical stock to check for evidence of obsolete stock

D. The matching of goods dispatch notes with statements received from creditors.

Problem 4. Which is the key assertion being addressed by the following internal control for sales: all sales invoices are supported by authorised goods outward dockets (ie delivery dockets) and approved customer orders?

A. Existence

B. Occurrence

C. Accuracy

D. Completeness

Problem 5. Which is the key assertion being addressed by the following internal control for Purchases : the office manager ensures purchase orders are filed in numerical sequence and the sequences are periodically?

A. Existence

B. Completeness

C. Cut-off

D. Accuracy