Quality Assurance & Compliance Flashcards
7 cards from real CB practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Quality Assurance & Compliance flashcards as text
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?
Answer: Invoice matching using unique invoice numbers
Assigning and verifying unique invoice numbers during the accounts payable process prevents duplicate invoice postings.
Under IRS recordkeeping requirements, how long must a business generally retain employment tax records?
Answer: 4 years after the tax due date
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.
Which of the following best describes a 'three-way match' in accounts payable?
Answer: Matching purchase order, receiving report, and vendor invoice
A three-way match compares the purchase order, receiving report, and vendor invoice to ensure all three agree before payment is authorized.
An employee handles both cash receipts and the accounts receivable ledger. This represents a violation of which internal control principle?
Answer: Segregation of duties
Segregation of duties requires that no single employee control both the custody of assets and the recording of transactions involving those assets.
Which financial statement error would most likely be caught by performing a horizontal (trend) analysis?
Answer: A significant unexplained change in gross profit margin compared to prior year
Horizontal analysis compares figures across periods, making significant unexplained fluctuations in ratios like gross profit margin highly visible.
A company's policy requires that all journal entries above $5,000 must be approved by a supervisor. This control is best classified as:
Answer: A preventive control
A supervisory approval requirement before an entry is posted is a preventive control because it stops errors or fraud before they occur.
Under the Sarbanes-Oxley Act (SOX), which of the following applies to publicly traded companies regarding internal controls?
Answer: Management must attest to the effectiveness of internal controls over financial reporting
SOX Section 404 requires management of public companies to assess and report on the effectiveness of internal controls over financial reporting.