Question 1

A credit memorandum received with a bank statement means the company's bank account has been increased.

Accepted Answer

A) True 
 B)False

Question 2

If a business has several bank accounts, it will have a separate record for each of them.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following scenarios reduces the risk of an employee fraud?

Accepted Answer

A)  An accountant being responsible for approving payments to a vendor 
B)  The bank reconciliation being prepared by an accountant 
C)  A sales clerk having access to the cash register 
D)  Remittance advices being sent directly to the cashier 
A)  An accountant being responsible for approving payments to a vendor 
B)  The bank reconciliation being prepared by an accountant 
C)  A sales clerk having access to the cash register 
D)  Remittance advices being sent directly to the cashier

Question 4

The following data is given for DGR Company: Net cash flows from operating activities $ \quad \$ 6,000,000 $
Cash and cash equivalents at end of year $ \quad \$ 2,700,000 $ DGR Company's ratio of cash to monthly cash expenses is:

Accepted Answer

A)  4.5 months. 
B)  5.4 months. 
C)  8.1 months. 
D)  3.2 months. 
A)  4.5 months. 
B)  5.4 months. 
C)  8.1 months. 
D)  3.2 months.

Question 5

In preparing a bank reconciliation, the amount of deposits in transit is deducted from the cash balance per books.

Accepted Answer

A) True 
 B)False

Question 6

WFC Co.'s petty cash receipts indicate the following expenditures for the end of October: Office supplies
$500
Miscellaneous selling expense
$350
Miscellaneous administrative expense
$160
As a result of these transactions, WFC Co.'s stockholders' equity:

Accepted Answer

A)  remains unchanged. 
B)  increases by $500. 
C)  decreases by $1,010. 
D)  decreases by $510. 
A)  remains unchanged. 
B)  increases by $500. 
C)  decreases by $1,010. 
D)  decreases by $510.

Question 7

Which of the following is true of EFT?

Accepted Answer

A)  It cost more than receiving cash payments through the mail. 
B)  It can process certain cash transactions at less cost than by using the mail. 
C)  It is easy to document purchase and sale transactions. 
D)  It means Effective Funds Transfer. 
A)  It cost more than receiving cash payments through the mail. 
B)  It can process certain cash transactions at less cost than by using the mail. 
C)  It is easy to document purchase and sale transactions. 
D)  It means Effective Funds Transfer.

Question 8

Adding a review of operations by an internal audit staff weakens internal control.

Accepted Answer

A) True 
 B)False

Question 9

Internal control consist of policies and procedures that _____.

Accepted Answer

A)  involve cost-benefit considerations 
B)  deal with human element of controls such as, fatigue, carelessness, etc. 
C)  ensure public relations 
D)  ensure the accuracy of business information 
A)  involve cost-benefit considerations 
B)  deal with human element of controls such as, fatigue, carelessness, etc. 
C)  ensure public relations 
D)  ensure the accuracy of business information

Question 10

Outstanding checks are checks that have been issued but have not cleared by the bank.

Accepted Answer

A) True 
 B)False

Question 11

Depositing all cash, checks, etc.in a bank and paying with checks is an internal control procedure over cash.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

A remittance advice is the notification accompanying the check issued to a creditor that states the specific invoice being paid.

Accepted Answer

A) True 
 B)False

Question 14

The purpose of the Sarbanes-Oxley Act of 2002 is to:

Accepted Answer

A)  restore public confidence and trust in the financial statements of publicly held companies. 
B)  require all companies to prepare financial statements. 
C)  protect companies from demands of investors, stockholders, and creditors. 
D)  do all of these. 
A)  restore public confidence and trust in the financial statements of publicly held companies. 
B)  require all companies to prepare financial statements. 
C)  protect companies from demands of investors, stockholders, and creditors. 
D)  do all of these.

Question 15

The amount of deposits in transit is included on the bank statement as a(n):

Accepted Answer

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

Question 16

Separating the responsibilities for purchasing, receiving, and paying for equipment is an example of the control procedure: separating operations, custody of assets, and accounting.

Accepted Answer

A) True 
 B)False

Question 17

Internal control is enhanced by combining the control of a transaction with the record-keeping function.

Accepted Answer

A) True 
 B)False

Question 18

Information and communication are essential elements of an organization's internal control.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following elements of internal control includes maintaining records of employees documenting their compensation and promotion?

Accepted Answer

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

Question 20

The Sarbanes-Oxley Act of 2002 requires companies and their independent accountants to:

Accepted Answer

A)  report on the effectiveness of the company's internal controls. 
B)  report on any fraud and theft detected in the company. 
C)  report on the state of the economy and likelihood of fraud. 
D)  report on the financial activities of the company. 
A)  report on the effectiveness of the company's internal controls. 
B)  report on any fraud and theft detected in the company. 
C)  report on the state of the economy and likelihood of fraud. 
D)  report on the financial activities of the company.

A credit memorandum received with a bank statement means the company's bank account has been increased.

If a business has several bank accounts, it will have a separate record for each of them.

Which of the following scenarios reduces the risk of an employee fraud?

The following data is given for DGR Company: Net cash flows from operating activities $\quad \$ 6,000,000$ Cash and cash equivalents at end of year $\quad \$ 2,700,000$ DGR Company's ratio of cash to monthly cash expenses is:

In preparing a bank reconciliation, the amount of deposits in transit is deducted from the cash balance per books.

WFC Co.'s petty cash receipts indicate the following expenditures for the end of October: Office supplies $500 Miscellaneous selling expense $350 Miscellaneous administrative expense $160 As a result of these transactions, WFC Co.'s stockholders' equity:

Which of the following is true of EFT?

Adding a review of operations by an internal audit staff weakens internal control.

Internal control consist of policies and procedures that _____.

Outstanding checks are checks that have been issued but have not cleared by the bank.

Depositing all cash, checks, etc.in a bank and paying with checks is an internal control procedure over cash.

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

A remittance advice is the notification accompanying the check issued to a creditor that states the specific invoice being paid.

The purpose of the Sarbanes-Oxley Act of 2002 is to:

The amount of deposits in transit is included on the bank statement as a(n):

Separating the responsibilities for purchasing, receiving, and paying for equipment is an example of the control procedure: separating operations, custody of assets, and accounting.

Internal control is enhanced by combining the control of a transaction with the record-keeping function.

Information and communication are essential elements of an organization's internal control.

Which of the following elements of internal control includes maintaining records of employees documenting their compensation and promotion?

The Sarbanes-Oxley Act of 2002 requires companies and their independent accountants to:

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

A credit memorandum received with a bank statement means the company's bank account has been increased.

If a business has several bank accounts, it will have a separate record for each of them.

Which of the following scenarios reduces the risk of an employee fraud?

The following data is given for DGR Company: Net cash flows from operating activities $6,000,000 \quad \$ 6,000,000 $6,000,000 Cash and cash equivalents at end of year $2,700,000 \quad \$ 2,700,000 $2,700,000 DGR Company's ratio of cash to monthly cash expenses is:

In preparing a bank reconciliation, the amount of deposits in transit is deducted from the cash balance per books.

WFC Co.'s petty cash receipts indicate the following expenditures for the end of October: Office supplies $500 Miscellaneous selling expense $350 Miscellaneous administrative expense $160 As a result of these transactions, WFC Co.'s stockholders' equity:

Which of the following is true of EFT?

Adding a review of operations by an internal audit staff weakens internal control.

Internal control consist of policies and procedures that _____.

Outstanding checks are checks that have been issued but have not cleared by the bank.

Depositing all cash, checks, etc.in a bank and paying with checks is an internal control procedure over cash.

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

A remittance advice is the notification accompanying the check issued to a creditor that states the specific invoice being paid.

The purpose of the Sarbanes-Oxley Act of 2002 is to:

The amount of deposits in transit is included on the bank statement as a(n):

Separating the responsibilities for purchasing, receiving, and paying for equipment is an example of the control procedure: separating operations, custody of assets, and accounting.

Internal control is enhanced by combining the control of a transaction with the record-keeping function.

Information and communication are essential elements of an organization's internal control.

Which of the following elements of internal control includes maintaining records of employees documenting their compensation and promotion?

The Sarbanes-Oxley Act of 2002 requires companies and their independent accountants to:

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

The following data is given for DGR Company: Net cash flows from operating activities $\quad \$ 6,000,000$ Cash and cash equivalents at end of year $\quad \$ 2,700,000$ DGR Company's ratio of cash to monthly cash expenses is: