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Exam style questions and answers

19 Steve works for Sciss Ltd as Head of the Production Department. He is
awarded a bonus each year if profits exceed budget. Steve is able to view the
accounts each month to see whether the department is exceeding the budget.

Sciss Ltd makes cardboard boxes and other cardboard containers. Their main
supply is paper which is fabricated into cardboard and then into any goods
ordered by their customers.

In the final month of the year, to maintain production, Steve had to order a large
quantity of paper which cost £25,000. He knows that this value will reduce the
year-end profit and, therefore, mean that the department will not receive their
bonus.

The employees have started work on the conversion of the paper into
cardboard, but Steve has hidden the invoice in his desk until the year-end
accounts have been finalised.

Controls which should be present at Sciss Ltd to prevent Steve’s actions
include: (Select all that apply)

A The matching of all orders to goods received notes.

B A year-end inventory count.

C The use of sequentially numbered orders.

D The use of sequentially numbered goods received notes.

E The matching of goods received notes to invoices.

F The use of sequentially numbered invoices.

G A sequence check on all orders and goods received notes.

20 EL makes electronic components which are fitted in to computers. They
manufacture over 600 different types of components and are considered to be
world leaders in their industry.

FM is a new company which has started to increase its market share in EL’s
industry. It was set up by two university graduates who excelled in their field.
They have developed a new component for computers which is selling well. EL
are surprised their developers didn’t think of it first.

EL has asked the development department to obtain such a component and to
reverse engineer it.

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