Free CPA Lesson: Types and Principles of Accounting Controls

This month’s free Wiley CPAexcel video lecture features Prof. Dan Stone of the University of Kentucky and covers Types and Principles of Accounting Controls, which are a recurring topic in nearly every section of the CPA Exam. This is a great introduction.

This video lecture may be short but it’s very informative.

Test Your Basic Knowledge of Accounting Controls

Now, here are a few sample questions to help gauge your understanding of the topic. The answers are at the bottom of this blog post (don’t cheat!).

1) Which of the following statements presents an example of a general control for a computerized system?

A. Limiting entry of sales transactions to only valid credit customers.
B. Creating hash totals from Social Security numbers for the weekly payroll.
C. Restricting entry of accounts payable transactions to only authorized users.
D. Restricting access to the computer center by use of biometric devices.

2) Milo Corp. maintains daily backups of its accounting system in a fireproof vault in the file library. Weekly, monthly, and annual backups are stored in a secure, fireproof vault at an off-site location.

Maintenance of the backup files is an example of

A. a detective control.
B. a feedback control.
C. a corrective control.
D. a preventive control.

3) A company’s new time clock process requires hourly employees to select an identification number and then choose the clock-in or clock-out button. A video camera captures an image of the employee using the system. Which of the following exposures can the new system be expected to change the least?

A. Fraudulent reporting of employees’ own hours.
B. Errors in employees’ overtime computation.
C. Inaccurate accounting of employees’ hours.
D. Recording of other employees’ hours.

Answers

1) D
2) C
3) B