Internal Controls Quiz

What is the main objective of internal controls?

• To eliminate all business risks

• To ensure compliance with laws and regulations

• To reduce the need for external audits

• To maximize profits

What is the purpose of control activities in an internal control system?

• To monitor business performance

• To prevent, detect, and correct errors and fraud

• To increase company profits

• To replace management oversight

Which sampling method ensures every item in the population has an equal chance of being selected?

• Judgmental sampling

• Convenience sampling

• Simple random sampling

• Quota sampling

In systematic sampling, how are samples selected?

• Randomly picking any items

• Selecting every kth item from a list

• Choosing only high-value transactions

• Based on recommendations from employees

Why is stratified sampling used?

• To randomly pick any available items

• To ensure different groups (strata) are represented

• To test only high-risk areas

• To simplify the audit process

Internal controls only apply to financial transactions.

Detective controls help to identify errors or fraud after they occur.

Convenience sampling is a probability sampling method.

A strong internal control system ensures that no fraud ever occurs.

The main purpose of sampling in auditing is to test the entire population.