Below are exam-oriented, scenario-based MCQs with answers on Control Applications, Accounting Information System (AIS) documents in manufacturing, and Internal Control weaknesses, framed exactly at the difficulty level tested in the US CMA & CIA Part 1 exams.
(Conceptual traps + practical judgment included.)
🔹 A. CONTROL APPLICATIONS – SCENARIO BASED MCQs
Q1.
A manufacturing company allows the same clerk to create vendors, approve purchase orders, and process payments in the ERP system.
This represents a weakness in which control application?
A. Input validation control
B. Processing control
C. Segregation of duties
D. Output control
✅ Answer: C
📌 Key exam point: Vendor master + PO + payment = classic fraud risk
Q2.
A system automatically rejects sales invoices with duplicate invoice numbers.
This is an example of:
A. Authorization control
B. Completeness control
C. Validity control
D. Edit check
✅ Answer: D
Q3.
During month-end, the system generates a report of unmatched receiving reports and vendor invoices for review.
This control primarily ensures:
A. Accuracy
B. Authorization
C. Completeness
D. Reconciliation
✅ Answer: D
Q4.
Management reviews exception reports for unusually high inventory write-offs.
This is best classified as:
A. Preventive control
B. Detective control
C. Corrective control
D. Input control
✅ Answer: B
Q5.
A system does not allow posting of journal entries unless a valid account code is entered.
This is a:
A. Processing control
B. Output control
C. Input control
D. Access control
✅ Answer: C
🔹 B. AIS DOCUMENTS DURING MANUFACTURING OPERATIONS
Q6.
A production manager authorizes the release of materials from the storeroom to the factory floor.
Which document initiates this process?
A. Purchase requisition
B. Receiving report
C. Materials requisition
D. Job cost sheet
✅ Answer: C
Q7.
Which document provides the primary source for recording direct labor cost to specific jobs?
A. Payroll register
B. Labor efficiency report
C. Employee time ticket
D. Job order
✅ Answer: C
Q8.
A document summarizing direct materials, direct labor, and applied overhead for a specific job is called:
A. Production order
B. Bill of materials
C. Job cost sheet
D. Cost ledger
✅ Answer: C
Q9.
Which document is most useful for verifying quantities actually received from suppliers?
A. Vendor invoice
B. Purchase order
C. Receiving report
D. Materials requisition
✅ Answer: C
Q10.
In a process costing environment, costs are accumulated using:
A. Job cost sheets
B. Materials requisitions
C. Production cost report
D. Time tickets
✅ Answer: C
🔹 C. INTERNAL CONTROL WEAKNESSES – EXAM SCENARIOS
Q11.
Inventory records are maintained by the same employee who performs the physical inventory count.
This weakness increases the risk of:
A. Clerical error only
B. Inefficient operations
C. Asset misappropriation
D. Unauthorized purchases
✅ Answer: C
Q12.
Which situation represents the greatest internal control weakness?
A. Use of prenumbered documents
B. Independent bank reconciliation
C. Lack of segregation between custody and record-keeping
D. Periodic management review
✅ Answer: C
Q13.
A company does not perform regular system access reviews.
Which risk is most directly increased?
A. Data redundancy
B. Processing delays
C. Unauthorized transactions
D. Inaccurate financial reporting
✅ Answer: C
Q14.
Which control would best prevent creation of fictitious vendors?
A. Three-way matching
B. Prenumbered purchase orders
C. Independent approval of vendor master changes
D. Inventory cycle counts
✅ Answer: C
Q15.
Which situation most likely indicates a control deficiency?
A. Management override approved in writing
B. Automated matching of PO, invoice, and receiving report
C. Unexplained reconciling items recurring each month
D. Use of ERP-based authorization controls
✅ Answer: C
🔹 D. HIGH-TRAP INTEGRATED MCQs (CMA + CIA FAVORITES)
Q16.
Which control best ensures accuracy and completeness of production costs?
A. Physical safeguards over inventory
B. Reconciliation of job cost sheets to general ledger
C. Access controls over payroll system
D. Budget variance analysis
✅ Answer: B
Q17.
In an automated environment, which control most effectively replaces manual authorization?
A. Batch totals
B. Role-based access controls
C. Output distribution logs
D. Supervisory review
✅ Answer: B
Q18.
Which is the most effective preventive control in a manufacturing AIS?
A. Exception reports
B. Internal audit review
C. System-enforced segregation of duties
D. Trend analysis
✅ Answer: C
Q19.
Which document helps prevent over-production?
A. Job cost sheet
B. Production order
C. Time ticket
D. Receiving report
✅ Answer: B
Q20.
A company experiences frequent inventory shrinkage despite accurate accounting records.
Which control is MOST likely missing?
A. Authorization of purchase orders
B. Accurate costing methods
C. Physical access controls over inventory
D. Proper depreciation policies
✅ Answer: C
🔹 LAST-DAY EXAM MEMORY KEYS
✔ Segregation of duties = Authorization + Custody + Record-keeping
✔ Receiving report verifies quantity, not price
✔ Job cost sheet = accumulation document
✔ Exception reports = Detective controls
✔ Vendor master controls = high-risk CMA/CIA area
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