CPB / BookKeeping Internal Controls and Fraud Prevention

Question 1

Which internal control principle requires that no single employee handles all aspects of a financial transaction from beginning to end?

Accepted Answer

Segregation of duties

Answer

Segregation of duties divides key tasks among multiple employees to reduce the risk of errors and fraud.

Question 2

A bookkeeper discovers that small amounts of cash are consistently missing from the petty cash fund. This is BEST described as:

Accepted Answer

Skimming

Answer

Skimming involves removing cash before it is recorded in the accounting system, making it difficult to detect.

Question 3

Which document provides written authorization before a company makes a payment to a vendor?

Accepted Answer

Purchase order

Answer

A purchase order authorizes the acquisition of goods or services and serves as a key control over expenditures.

Question 4

Requiring two authorized signatures on checks above a specified dollar amount is an example of which control?

Accepted Answer

Dual authorization

Answer

Dual authorization requires two approvals for high-value transactions, reducing unauthorized disbursement risk.

Question 5

Which fraud scheme involves an employee stealing a customer payment and then using a later customer payment to cover the shortage?

Accepted Answer

Lapping

Answer

Lapping is a receivables fraud where stolen payments are concealed by applying subsequent customer receipts to earlier accounts.

CPB / BookKeeping Practice Test