Question 1

The Sarbanes-Oxley Act requires companies and their independent accountants to report on the effectiveness of the company's internal controls.

Accepted Answer

A) True 
 B)False

Question 2

Accompanying the bank statement was a debit memorandum for an NSF check received from a customer.This item would be included on the bank reconciliation as a(n):

Accepted Answer

A)  deduction from the cash balance per books. 
B)  addition to the cash balance per bank. 
C)  deduction from the cash balance per bank. 
D)  addition to the cash balance per books. 
A)  deduction from the cash balance per books. 
B)  addition to the cash balance per bank. 
C)  deduction from the cash balance per bank. 
D)  addition to the cash balance per books.

Question 3

The internal control environment is enhanced by the hiring and retention of competent, honest employees.

Accepted Answer

A) True 
 B)False

Question 4

The amount of the "adjusted balance" appearing on a bank reconciliation as of a given date is the amount that is shown on the balance sheet for that date after all adjusting entries have been entered.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is an element of the control environment?

Accepted Answer

A)  Control procedures 
B)  Managements' operating styles 
C)  Information and communication activities 
D)  Risk assessment plans 
A)  Control procedures 
B)  Managements' operating styles 
C)  Information and communication activities 
D)  Risk assessment plans

Question 6

A special cash fund used to make small payments that occur frequently is called a(n):

Accepted Answer

A)  operating expenses fund. 
B)  change fund. 
C)  market fund. 
D)  petty cash fund. 
A)  operating expenses fund. 
B)  change fund. 
C)  market fund. 
D)  petty cash fund.

Question 7

A voucher is the notification accompanying the check issued to a creditor that indicates the specific invoice being paid.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following warning signs could mean receipts are being pocketed before being deposited?

Accepted Answer

A)  Missing documents or gaps in transaction numbers 
B)  An unusual increase in customer refunds 
C)  A sudden increase in cash payments 
D)  A difference between daily bank and cash balance 
A)  Missing documents or gaps in transaction numbers 
B)  An unusual increase in customer refunds 
C)  A sudden increase in cash payments 
D)  A difference between daily bank and cash balance

Question 9

A bank reconciliation is an important part of the system of internal controls.

Accepted Answer

A) True 
 B)False

Question 10

Describe the features of a voucher system and list typical supporting documents for a voucher.

Accepted Answer

A voucher system is used to control cash

Question 11

For each of the following procedures, indicate whether it is an internal control strength or a weakness.Also, for each weakness, explain why it is a weakness and how it can be corrected.
(a)Only the best accounting graduates are hired to eliminate the need for training.
(b)The person responsible for order supplies also records the receipt of the supplies.
(c)Company policy mandates that all employees take vacation time.
(d)Internal auditors constantly monitor the internal control system.
(e)The accountant deposits cash at least once each day.

Accepted Answer

(a)Weakness.All new hires need to be tra

Question 12

Anna erroneously records a check drawn for $385 as $835.This error is adjusted on the bank reconciliation as a(n):

Accepted Answer

A)  $450 addition to the cash balance per books. 
B)  $385 addition to the cash balance per bank. 
C)  $835 deduction from the cash balance per bank. 
D)  $1,220 deduction from the cash balance per books. 
A)  $450 addition to the cash balance per books. 
B)  $385 addition to the cash balance per bank. 
C)  $835 deduction from the cash balance per bank. 
D)  $1,220 deduction from the cash balance per books.

Question 13

On the bank's accounting records, customers' accounts are normally shown as a(n):

Accepted Answer

A)  revenue. 
B)  liability. 
C)  asset. 
D)  expenses. 
A)  revenue. 
B)  liability. 
C)  asset. 
D)  expenses.

Question 14

In preparing a bank reconciliation, the amount indicated by a debit memorandum for bank service charges is deducted from the cash balance per bank.

Accepted Answer

A) True 
 B)False

Question 15

The framework that has become widely accepted as the standard by which companies design, analyze, and evaluate internal controls is the:

Accepted Answer

A)  Internal Control - Integrated Framework by the Committee of Sponsoring Organizations. 
B)  Internal Control - Integrated Framework by the Congress of Special Offerings. 
C)  Internal Control Localized Structure by the Committee of Sponsoring Organizations. 
D)  Internal Control Localized Structure by the Congress of Special Offerings. 
A)  Internal Control - Integrated Framework by the Committee of Sponsoring Organizations. 
B)  Internal Control - Integrated Framework by the Congress of Special Offerings. 
C)  Internal Control Localized Structure by the Committee of Sponsoring Organizations. 
D)  Internal Control Localized Structure by the Congress of Special Offerings.

Question 16

When the petty cash fund is replenished, the petty cash account is adjusted for the total of all expenditures made since the fund was last replenished.

Accepted Answer

A) True 
 B)False

Question 17

When preparing a bank reconciliation statement, outstanding checks would:

Accepted Answer

A)  increase the cash balance according to the bank statement. 
B)  deduct the cash balance according to the bank statement. 
C)  increase the cash balance according to the company statement. 
D)  deduct the cash balance according to the company statement. 
A)  increase the cash balance according to the bank statement. 
B)  deduct the cash balance according to the bank statement. 
C)  increase the cash balance according to the company statement. 
D)  deduct the cash balance according to the company statement.

Question 18

Which of the following of internal control deals with hiring, training, evaluation, compensation, and promotion of employees?

Accepted Answer

A)  Monitoring 
B)  Control environment 
C)  Risk assessment 
D)  Control procedures 
A)  Monitoring 
B)  Control environment 
C)  Risk assessment 
D)  Control procedures

Question 19

Money orders are considered cash.

Accepted Answer

A) True 
 B)False

Question 20

Money market funds, commercial paper, and U.S.Treasury Bills are examples of cash equivalents.

Accepted Answer

A) True 
 B)False

The Sarbanes-Oxley Act requires companies and their independent accountants to report on the effectiveness of the company's internal controls.

Accompanying the bank statement was a debit memorandum for an NSF check received from a customer.This item would be included on the bank reconciliation as a(n):

The internal control environment is enhanced by the hiring and retention of competent, honest employees.

The amount of the "adjusted balance" appearing on a bank reconciliation as of a given date is the amount that is shown on the balance sheet for that date after all adjusting entries have been entered.

Which of the following is an element of the control environment?

A special cash fund used to make small payments that occur frequently is called a(n):

A voucher is the notification accompanying the check issued to a creditor that indicates the specific invoice being paid.

Which of the following warning signs could mean receipts are being pocketed before being deposited?

A bank reconciliation is an important part of the system of internal controls.

Describe the features of a voucher system and list typical supporting documents for a voucher.

Anna erroneously records a check drawn for $385 as $835.This error is adjusted on the bank reconciliation as a(n):

On the bank's accounting records, customers' accounts are normally shown as a(n):

In preparing a bank reconciliation, the amount indicated by a debit memorandum for bank service charges is deducted from the cash balance per bank.

The framework that has become widely accepted as the standard by which companies design, analyze, and evaluate internal controls is the:

When the petty cash fund is replenished, the petty cash account is adjusted for the total of all expenditures made since the fund was last replenished.

When preparing a bank reconciliation statement, outstanding checks would:

Which of the following of internal control deals with hiring, training, evaluation, compensation, and promotion of employees?

Money orders are considered cash.

Money market funds, commercial paper, and U.S.Treasury Bills are examples of cash equivalents.

The Role of Accounting in Business

Basic Accounting Systems: Cash Basis

Basic Accounting Systems: Accrual Basis

Accounting for Merchandising Businesses

Receivables and Inventories

Fixed Assets, Natural Resources, and Intangible Assets

Liabilities and Stockholders Equity

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

Exam 5: Internal Control and Cash

The Sarbanes-Oxley Act requires companies and their independent accountants to report on the effectiveness of the company's internal controls.

Accompanying the bank statement was a debit memorandum for an NSF check received from a customer.This item would be included on the bank reconciliation as a(n):

The internal control environment is enhanced by the hiring and retention of competent, honest employees.

The amount of the "adjusted balance" appearing on a bank reconciliation as of a given date is the amount that is shown on the balance sheet for that date after all adjusting entries have been entered.

Which of the following is an element of the control environment?

A special cash fund used to make small payments that occur frequently is called a(n):

A voucher is the notification accompanying the check issued to a creditor that indicates the specific invoice being paid.

Which of the following warning signs could mean receipts are being pocketed before being deposited?

A bank reconciliation is an important part of the system of internal controls.

Describe the features of a voucher system and list typical supporting documents for a voucher.

Anna erroneously records a check drawn for $385 as $835.This error is adjusted on the bank reconciliation as a(n):

On the bank's accounting records, customers' accounts are normally shown as a(n):

In preparing a bank reconciliation, the amount indicated by a debit memorandum for bank service charges is deducted from the cash balance per bank.

The framework that has become widely accepted as the standard by which companies design, analyze, and evaluate internal controls is the:

When the petty cash fund is replenished, the petty cash account is adjusted for the total of all expenditures made since the fund was last replenished.

When preparing a bank reconciliation statement, outstanding checks would:

Which of the following of internal control deals with hiring, training, evaluation, compensation, and promotion of employees?

Money orders are considered cash.

Money market funds, commercial paper, and U.S.Treasury Bills are examples of cash equivalents.

The Role of Accounting in Business

Basic Accounting Systems: Cash Basis

Basic Accounting Systems: Accrual Basis

Accounting for Merchandising Businesses

Receivables and Inventories

Fixed Assets, Natural Resources, and Intangible Assets

Liabilities and Stockholders Equity

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters