FREE CPB Internal Controls & Ethical Standards Questions and Answers

Question 1

What is the primary purpose of internal controls in accounting?

Accepted Answer

To safeguard assets and ensure accuracy

Answer

Internal controls are processes implemented by a company to provide reasonable assurance regarding the achievement of objectives. Their primary purpose in accounting is to protect the company's assets from theft or misuse, ensure the accuracy and reliability of financial reporting, and promote operational efficiency.

Question 2

Which control helps prevent unauthorized access to accounting systems?

Accepted Answer

User access controls

Answer

User access controls are a critical internal control that restricts who can access specific accounting systems, data, and functions based on their role and responsibilities. This prevents unauthorized individuals from viewing, modifying, or deleting sensitive financial information, thereby safeguarding data integrity and preventing fraud.

Question 3

What is segregation of duties?

Accepted Answer

Separating responsibilities among employees

Answer

Segregation of duties is a key internal control principle that involves dividing critical tasks, such as authorization, record-keeping, and asset custody, among different individuals. This prevents any single person from having complete control over a transaction, significantly reducing the risk of error, fraud, or misuse of assets.

Question 4

Which of the following is an example of a detective control?

Accepted Answer

Reconciliations

Answer

Detective controls are designed to identify errors or irregularities that have already occurred. Reconciliations, such as bank reconciliations or accounts receivable reconciliations, compare two independent sets of records to find discrepancies, thus detecting potential issues after a transaction has been processed.

Question 5

Why is ethics important in bookkeeping?

Accepted Answer

To ensure honesty and public trust

Answer

Ethics in bookkeeping is paramount because financial records must be accurate, reliable, and transparent to maintain trust among stakeholders, including investors, creditors, and the public. Upholding ethical standards ensures the integrity of financial reporting and compliance with laws and regulations.

CPB - Certified Public Bookkeeper Practice Test

CPB - Certified Public Bookkeeper Practice Test

FREE CPB Internal Controls & Ethical Standards Questions and Answers