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MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) All of the following are purposes of internal control EXCEPT A) to ensure accurate and reliable accounts records B) to promote operational inefficiency C) to encourage adherence to company policies 1) to safeguard assets 2) Which characteristic will NOT be found in an effective system of internal control? 2) A)A combination of duties B) Competent, reliable, and ethical personnel C) A separation of duties D) Documents and records 3) A plan of organization and a system of procedures, implemented by company management and 3 the board of directors, is called A) the Sarbanes-Oxley Act. C) internal control. B) the budget D) the audit. 4) SOX created a new body to oversee the audits of public companies called the A) Securities and Exchange Commission. B) Association of Certified Fraud Examiners. C) Public Company Accounting Oversight Board. D) Association of Certified Public Accountants. 5) An examination of the company's financial statements and its accounting system, including its controls, is: A) a budgeting system. C) a monitoring system. B) an audit. D) none of the above. 6) The beginning cash balance is $3,000, estimated cash receipts are $105,000, and estimated cash disbursements are $111,000. How much cash must be borrowed to have a desired ending balance of $5,0002 A) $8,000 B) $6,000 C) $2,000 D) $5,000 7) Realized gains and losses occur when: A) the cost of the investment differs from the current market value. B) the investment is sold. C) the investment has not been sold. D) both B and Coccur 8) The use of the allowance method of accounting for bad debts is preferred over the direct write-off method because of the: A) historical cost principle. C) full disclosure principle. B) matching principle. D) revenue recognition principle. A-1

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