CB Quality Assurance & Compliance 2

Question 1

A bookkeeper discovers that a vendor invoice was posted twice in the same period. Which control procedure is designed to prevent this type of error?

Accepted Answer

Invoice matching using unique invoice numbers

Answer

Assigning and verifying unique invoice numbers during the accounts payable process prevents duplicate invoice postings.

Question 2

Under IRS recordkeeping requirements, how long must a business generally retain employment tax records?

Accepted Answer

4 years after the tax due date

Answer

The IRS requires employment tax records to be kept for at least 4 years after the date the tax is due or paid, whichever is later.

Question 3

Which of the following best describes a 'three-way match' in accounts payable?

Accepted Answer

Matching purchase order, receiving report, and vendor invoice

Answer

A three-way match compares the purchase order, receiving report, and vendor invoice to ensure all three agree before payment is authorized.

Question 4

An employee handles both cash receipts and the accounts receivable ledger. This represents a violation of which internal control principle?

Accepted Answer

Segregation of duties

Answer

Segregation of duties requires that no single employee control both the custody of assets and the recording of transactions involving those assets.

Question 5

Which financial statement error would most likely be caught by performing a horizontal (trend) analysis?

Accepted Answer

A significant unexplained change in gross profit margin compared to prior year

Answer

Horizontal analysis compares figures across periods, making significant unexplained fluctuations in ratios like gross profit margin highly visible.

(CB) Certified Bookkeeper Practice Test