Question 1

An example of segregation of duties is having a check signer recording cash disbursements.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following would be deducted from the balance per bank on a bank reconciliation?

Accepted Answer

A) Outstanding checks. 
B) Deposits in transit. 
C) Notes collected by the bank. 
D) Service charges. 
A) Outstanding checks. 
B) Deposits in transit. 
C) Notes collected by the bank. 
D) Service charges.

Question 3

Bishop Company wrote checks totaling $51,240 during October and $55,950 during November. $48,720 of these checks cleared the bank in October, and $54,660 cleared the bank in November. What was the amount of outstanding checks on November 30?

Accepted Answer

A) $3,810. 
B) $690. 
C) $1,830. 
D) $5,940. 
A) $3,810. 
B) $690. 
C) $1,830. 
D) $5,940.

Question 4

A good system of internal control will safeguard its assets and enhance the accuracy and reliability of its accounting records.

Accepted Answer

A) True 
 B)False

Question 5

A $300 petty cash fund has cash of $55 and receipts of $240. The journal entry to replenish the account would include a

Accepted Answer

A) debit to Cash for $240. 
B) credit to Petty Cash for $245. 
C) debit to Cash Over and Short for $5. 
D) credit to Cash for $240. 
A) debit to Cash for $240. 
B) credit to Petty Cash for $245. 
C) debit to Cash Over and Short for $5. 
D) credit to Cash for $240.

Question 6

Which of the following does not appear as a separate section on the cash budget?

Accepted Answer

A) Cash receipts. 
B) Cash disbursements. 
C) Cash sales. 
D) Financing. 
A) Cash receipts. 
B) Cash disbursements. 
C) Cash sales. 
D) Financing.

Question 7

The use of prenumbered checks is an example of

Accepted Answer

A) documentation procedures. 
B) independent internal verification. 
C) establishment of responsibility. 
D) segregation of duties. 
A) documentation procedures. 
B) independent internal verification. 
C) establishment of responsibility. 
D) segregation of duties.

Question 8

Cash is defined by IFRS as

Accepted Answer

A) cash on hand. 
B) demand deposits. 
C) cash on hand and demand deposits. 
D) cash on hand, demand deposits, and highly liquid investments. 
A) cash on hand. 
B) demand deposits. 
C) cash on hand and demand deposits. 
D) cash on hand, demand deposits, and highly liquid investments.

Question 9

When one individual is responsible for all related activities, the potential for errors and irregularities is decreased.

Accepted Answer

A) True 
 B)False

Question 10

The entry to replenish a petty cash fund includes a credit to

Accepted Answer

A) Petty Cash. 
B) Cash. 
C) Freight-In. 
D) Postage Expense. 
A) Petty Cash. 
B) Cash. 
C) Freight-In. 
D) Postage Expense.

Question 11

Which one of the following is not an objective of a system of internal controls?

Accepted Answer

A) Safeguard company assets. 
B) Enhance the accuracy and reliability of accounting records. 
C) Fairness of the financial statements. 
D) Reduce the risks of errors. 
A) Safeguard company assets. 
B) Enhance the accuracy and reliability of accounting records. 
C) Fairness of the financial statements. 
D) Reduce the risks of errors.

Question 12

Having one person responsible for the related activities of ordering merchandise, receiving goods, and paying for them

Accepted Answer

A) increases the potential for errors and fraud. 
B) decreases the potential for errors and fraud. 
C) is an example of good internal control. 
D) is a good example of safeguarding the company's assets. 
A) increases the potential for errors and fraud. 
B) decreases the potential for errors and fraud. 
C) is an example of good internal control. 
D) is a good example of safeguarding the company's assets.

Question 13

Segregation of duties among employees eliminates the possibility of collusion.

Accepted Answer

A) True 
 B)False

Question 14

Physical controls to safeguard assets do not include

Accepted Answer

A) cashier department supervisors. 
B) vaults. 
C) safety deposit boxes. 
D) locked warehouses. 
A) cashier department supervisors. 
B) vaults. 
C) safety deposit boxes. 
D) locked warehouses.

Question 15

In a small business, the lack of certain separations of duties can best be overcome by

Accepted Answer

A) bonding the employees. 
B) getting the owner actively involved. 
C) hiring only honest employees. 
D) holding one person responsible for a given set of transactions. 
A) bonding the employees. 
B) getting the owner actively involved. 
C) hiring only honest employees. 
D) holding one person responsible for a given set of transactions.

Question 16

Internal controls are not designed to safeguard assets from

Accepted Answer

A) natural disasters. 
B) employee theft. 
C) robbery. 
D) unauthorized use. 
A) natural disasters. 
B) employee theft. 
C) robbery. 
D) unauthorized use.

Question 17

All of the following requirements about internal controls were enacted under the Sarbanes Oxley Act except

Accepted Answer

A) independent outside auditors must attest to the level of internal control. 
B) companies must develop sound internal controls over financial reporting. 
C) companies must continually assess the functionality of internal controls. 
D) independent outside auditors must eliminate redundant internal controls. 
A) independent outside auditors must attest to the level of internal control. 
B) companies must develop sound internal controls over financial reporting. 
C) companies must continually assess the functionality of internal controls. 
D) independent outside auditors must eliminate redundant internal controls.

Question 18

Which of the following controls would best help detect the removal of a blank check by an employee from the back of a company's checkbook for subsequent misappropriation of funds?

Accepted Answer

A) An accounting policies manual. 
B) Tracing any debit memorandums from the bank to the company's records. 
C) The use of prenumbered checks. 
D) A review of the cash budget. 
A) An accounting policies manual. 
B) Tracing any debit memorandums from the bank to the company's records. 
C) The use of prenumbered checks. 
D) A review of the cash budget.

Question 19

What percentage of companies worldwide have experienced fraud in a recent 12-month period?

Accepted Answer

A) 1% 
B) 10% 
C) 34% 
D) 100% 
A) 1% 
B) 10% 
C) 34% 
D) 100%

Question 20

The following information was taken from Hurlbert Company cash budget for the month June $\begin{array}{lr}
\text { Beginning cash balance } & \$ 69,000 \
\text { Cash receipts } & 93,000 \
\text { Cash disbursements } & 117,000
\end{array}$ If the company has a policy of maintaining an end of the month cash balance of $60,000, the amount the company would have to borrow is

Accepted Answer

A) $36,000. 
B) $15,000. 
C) $24,000. 
D) $0. 
A) $36,000. 
B) $15,000. 
C) $24,000. 
D) $0.

Exam 6: Fraud, Internal Control, and Cash

An example of segregation of duties is having a check signer recording cash disbursements.

Which of the following would be deducted from the balance per bank on a bank reconciliation?

Bishop Company wrote checks totaling $51,240 during October and $55,950 during November. $48,720 of these checks cleared the bank in October, and $54,660 cleared the bank in November. What was the amount of outstanding checks on November 30?

A good system of internal control will safeguard its assets and enhance the accuracy and reliability of its accounting records.

A $300 petty cash fund has cash of $55 and receipts of $240. The journal entry to replenish the account would include a

Which of the following does not appear as a separate section on the cash budget?

The use of prenumbered checks is an example of

Cash is defined by IFRS as

When one individual is responsible for all related activities, the potential for errors and irregularities is decreased.

The entry to replenish a petty cash fund includes a credit to

Which one of the following is not an objective of a system of internal controls?

Having one person responsible for the related activities of ordering merchandise, receiving goods, and paying for them

Segregation of duties among employees eliminates the possibility of collusion.

Physical controls to safeguard assets do not include

In a small business, the lack of certain separations of duties can best be overcome by

Internal controls are not designed to safeguard assets from

All of the following requirements about internal controls were enacted under the Sarbanes Oxley Act except

Which of the following controls would best help detect the removal of a blank check by an employee from the back of a company's checkbook for subsequent misappropriation of funds?

What percentage of companies worldwide have experienced fraud in a recent 12-month period?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

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