Question 1

Television monitors are an example of a physical safeguard control.

Accepted Answer

A) True 
 B)False

Question 2

In terms of segregation of duties, related buying activities include

Accepted Answer

A)  ordering, receiving, paying. 
B)  ordering, selling, paying. 
C)  ordering, shipping, billing. 
D)  selling, shipping, paying. 
A)  ordering, receiving, paying. 
B)  ordering, selling, paying. 
C)  ordering, shipping, billing. 
D)  selling, shipping, paying.

Question 3

One of the controls for documents is to have all of the documents pre-numbered.

Accepted Answer

A) True 
 B)False

Question 4

The following internal control procedures are used by Brooks Company for cash receipts and disbursements:
1. Cashiers receive all over-the-counter receipts and place the cash into a single cash drawer.
2. When cash in the drawer exceeds $500, it is placed in an envelope marked "cash" and stored in a drawer in the supervisor's office.
3. The company's accountant makes daily bank deposits.
4. The clerk in the receiving department authorizes all payments for purchases.
5. Blank cheques are kept in the main office.
Instructions
For each of the above procedures, explain the weakness in internal control, identify the control policy or procedure violated and suggest a change in procedure that will result in better control.

Accepted Answer

The answer of The following internal control procedures are used...

Question 5

An electronic funds transfer will result in less internal control because no cash or cheques are handled by company employees.

Accepted Answer

A) True 
 B)False

Question 6

EFT Payments increase the risk of lost, stolen or forged cheques.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Sales using a retailer's own credit card are considered to be

Accepted Answer

A)  cash. 
B)  prepaid expenses. 
C)  accounts receivable. 
D)  bank loans. 
A)  cash. 
B)  prepaid expenses. 
C)  accounts receivable. 
D)  bank loans.

Question 9

Responsibility for authorizing and approving transactions must be given to the correct person.

Accepted Answer

A) True 
 B)False

Question 10

A debit balance in Cash Over and Short is reported as a

Accepted Answer

A)  contra asset. 
B)  miscellaneous asset. 
C)  miscellaneous expense. 
D)  miscellaneous revenue. 
A)  contra asset. 
B)  miscellaneous asset. 
C)  miscellaneous expense. 
D)  miscellaneous revenue.

Question 11

External auditors may be employees of the company.

Accepted Answer

A) True 
 B)False

Question 12

Cash is listed in the current asset section of the Balance Sheet.

Accepted Answer

A) True 
 B)False

Question 13

Internal control over cash receipts will include all of the following EXCEPT

Accepted Answer

A)  only designated personnel are authorized to handle cash receipts. 
B)  only one authorized person will receive the cash and record the cash receipts. 
C)  use of cash registers. 
D)  employees are required to take vacation. 
A)  only designated personnel are authorized to handle cash receipts. 
B)  only one authorized person will receive the cash and record the cash receipts. 
C)  use of cash registers. 
D)  employees are required to take vacation.

Question 14

An independent check of performance would be more effective if it is done by surprise.

Accepted Answer

A) True 
 B)False

Question 15

The control activity related to NOT having the same person authorize and pay for goods is known as

Accepted Answer

A)  establishment of responsibility. 
B)  independent check of performance. 
C)  segregation of duties. 
D)  rotation of duties. 
A)  establishment of responsibility. 
B)  independent check of performance. 
C)  segregation of duties. 
D)  rotation of duties.

Question 16

Joe Sanji purchases books from Canada Books Co. for $1,000, using his Royal Bank Financial Group VISA card. The service fee the bank charges Canada Books is 3%. The entry made to record the transaction by Canada Books is

Accepted Answer

The answer of Joe Sanji purchases books from Canada Books...

Question 17

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account which is

Accepted Answer

A)  a contra-asset account. 
B)  a liability account. 
C)  also an asset account. 
D)  an owner's equity account. 
A)  a contra-asset account. 
B)  a liability account. 
C)  also an asset account. 
D)  an owner's equity account.

Question 18

Monitoring involves identifying the control activities and assessing the risks on these activities.

Accepted Answer

A) True 
 B)False

Question 19

Sales using a non bank credit card are considered cash sales by the retailer.

Accepted Answer

A) True 
 B)False

Question 20

The size of a business may limit internal control.

Accepted Answer

A) True 
 B)False

Television monitors are an example of a physical safeguard control.

In terms of segregation of duties, related buying activities include

One of the controls for documents is to have all of the documents pre-numbered.

An electronic funds transfer will result in less internal control because no cash or cheques are handled by company employees.

EFT Payments increase the risk of lost, stolen or forged cheques.

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

Sales using a retailer's own credit card are considered to be

Responsibility for authorizing and approving transactions must be given to the correct person.

A debit balance in Cash Over and Short is reported as a

External auditors may be employees of the company.

Cash is listed in the current asset section of the Balance Sheet.

Internal control over cash receipts will include all of the following EXCEPT

An independent check of performance would be more effective if it is done by surprise.

The control activity related to NOT having the same person authorize and pay for goods is known as

Joe Sanji purchases books from Canada Books Co. for $1,000, using his Royal Bank Financial Group VISA card. The service fee the bank charges Canada Books is 3%. The entry made to record the transaction by Canada Books is

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account which is

Monitoring involves identifying the control activities and assessing the risks on these activities.

Sales using a non bank credit card are considered cash sales by the retailer.

The size of a business may limit internal control.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Long-Lived Assets

Current Liabilities

Accounting Principles

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Investments

Filters

Exam 7: Internal Control and Cash

Television monitors are an example of a physical safeguard control.

In terms of segregation of duties, related buying activities include

One of the controls for documents is to have all of the documents pre-numbered.

An electronic funds transfer will result in less internal control because no cash or cheques are handled by company employees.

EFT Payments increase the risk of lost, stolen or forged cheques.

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

Sales using a retailer's own credit card are considered to be

Responsibility for authorizing and approving transactions must be given to the correct person.

A debit balance in Cash Over and Short is reported as a

External auditors may be employees of the company.

Cash is listed in the current asset section of the Balance Sheet.

Internal control over cash receipts will include all of the following EXCEPT

An independent check of performance would be more effective if it is done by surprise.

The control activity related to NOT having the same person authorize and pay for goods is known as

Joe Sanji purchases books from Canada Books Co. for $1,000, using his Royal Bank Financial Group VISA card. The service fee the bank charges Canada Books is 3%. The entry made to record the transaction by Canada Books is

A company maintains the asset account, Cash in Bank, on its books, while the bank maintains a reciprocal account which is

Monitoring involves identifying the control activities and assessing the risks on these activities.

Sales using a non bank credit card are considered cash sales by the retailer.

The size of a business may limit internal control.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Long-Lived Assets

Current Liabilities

Accounting Principles

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Investments

Filters