Question 1

Which of the following is not an internal control procedure relating to cash payments?

Accepted Answer

A)  Using an voucher system 
B)  Using an imprest system 
C)  Preparing a bank reconciliation 
D)  The use of cash count sheets 
A)  Using an voucher system 
B)  Using an imprest system 
C)  Preparing a bank reconciliation 
D)  The use of cash count sheets

Question 2

Research has found that three factors exist when fraud occurs.Which of the following is not one of the three factors of the fraud triangle?

Accepted Answer

A)  Incentive to commit fraud 
B)  Opportunity to commit fraud 
C)  Ability to rationalize the fraud 
D)  Lack of a code of ethics 
A)  Incentive to commit fraud 
B)  Opportunity to commit fraud 
C)  Ability to rationalize the fraud 
D)  Lack of a code of ethics

Question 3

This month's bank statement includes a check from a customer that was marked NSF.How would this item be treated on the bank reconciliation? Is it added to or deducted from the bank balance or the company's cash (book)balance?

Accepted Answer

A)  It would be deducted from the book balance. 
B)  It would be added to the bank balance. 
C)  It would be deducted from the bank balance. 
D)  It would be added to the book balance. 
A)  It would be deducted from the book balance. 
B)  It would be added to the bank balance. 
C)  It would be deducted from the bank balance. 
D)  It would be added to the book balance.

Question 4

For each of the following cash activities,choose the appropriate letter to match the activity with the internal control principle to which it relates.Each internal control principle may be used more than once.
Activity
1.____ A password is required to open up the cash register
2.____ The treasurer is the person who is approved to sign checks
3.____ A list of checks received in the mail is prepared
4.____ A bank reconciliation is prepared each month
5.____ The treasurer is not permitted to make bank deposits
6.____ Checks are pre-numbered.
7.____ Cashiers cannot approve price changes.
8.____ Unused checks are kept in the vault.
Internal Control Principle
A.Establish responsibility
B.Segregate duties
C.Restrict access
D.Document procedures
E.Independently verify

Accepted Answer

1.C
2.A
3.

Question 5

Petty cash payments are recorded in the accounting system when:

Accepted Answer

A)  the petty cash fund needs to be replenished 
B)  a payment is made out of petty cash 
C)  a bank reconciliation is prepared for the petty cash fund 
D)  cash is received from returns of merchandise 
A)  the petty cash fund needs to be replenished 
B)  a payment is made out of petty cash 
C)  a bank reconciliation is prepared for the petty cash fund 
D)  cash is received from returns of merchandise

Question 6

On April 1,a company established a petty cash fund of $1,000.
Required:
Prepare the journal entry,if any,required on April 1.

Accepted Answer

The answer of On April 1,a company established a petty...

Question 7

The account Cash Overage is which type of account?

Accepted Answer

A)  An asset account 
B)  A liability account 
C)  A miscellaneous revenue account 
D)  A miscellaneous expense account 
A)  An asset account 
B)  A liability account 
C)  A miscellaneous revenue account 
D)  A miscellaneous expense account

Question 8

Considering current laws that deal with misstatements of financial results,which of the following statements is correct?

Accepted Answer

A)  Managers found guilty can escape paying fines if they declare bankruptcy. 
B)  Managers can be sentenced to maximum jail terms of up to 20 years for each violation. 
C)  Managers found guilty may keep any bonuses or profits from the misrepresentation if their fines are less than such bonuses or profits. 
D)  Whistleblowers who secretly submit concerns about questionable accounting practices will be fired. 
A)  Managers found guilty can escape paying fines if they declare bankruptcy. 
B)  Managers can be sentenced to maximum jail terms of up to 20 years for each violation. 
C)  Managers found guilty may keep any bonuses or profits from the misrepresentation if their fines are less than such bonuses or profits. 
D)  Whistleblowers who secretly submit concerns about questionable accounting practices will be fired.

Question 9

The attitude that people in the organization hold regarding internal control is referred to as the:

Accepted Answer

A)  control environment. 
B)  control atmosphere. 
C)  risk assessment. 
D)  monitoring activities. 
A)  control environment. 
B)  control atmosphere. 
C)  risk assessment. 
D)  monitoring activities.

Question 10

The bank will show a customer's withdrawal as a:

Accepted Answer

A)  debit, because cash is an asset. 
B)  credit, because a withdrawal increases its liability from the bank's point of view. 
C)  debit, because a withdrawal decreases its liability from the bank's point of view. 
D)  credit, because cash is an asset. 
A)  debit, because cash is an asset. 
B)  credit, because a withdrawal increases its liability from the bank's point of view. 
C)  debit, because a withdrawal decreases its liability from the bank's point of view. 
D)  credit, because cash is an asset.

Question 11

A voucher system employs various forms of documentation related to steps in the control over cash.Which of the following is not a document in the voucher system?

Accepted Answer

A)  Company check 
B)  Purchase requisition 
C)  Supplier invoice 
D)  Cash count sheet 
A)  Company check 
B)  Purchase requisition 
C)  Supplier invoice 
D)  Cash count sheet

Question 12

A collection of documents prepared in the process of approving,processing and documenting all purchases and payment made on account is referred to as a:

Accepted Answer

A)  voucher. 
B)  imprest. 
C)  EFT. 
D)  reconciliation. 
A)  voucher. 
B)  imprest. 
C)  EFT. 
D)  reconciliation.

Question 13

Cash equivalents are short-term,highly liquid investments purchased within one year of maturity.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following would not cause the bank balance to differ from the cash balance in the accounting records?

Accepted Answer

A)  The company wrote checks that have cleared the bank. 
B)  Deposits outstanding that have been recorded on the company's records, but not on the bank's. 
C)  The company made an error in recording a deposit. 
D)  The bank made an error in recording a deposit made by the company. 
A)  The company wrote checks that have cleared the bank. 
B)  Deposits outstanding that have been recorded on the company's records, but not on the bank's. 
C)  The company made an error in recording a deposit. 
D)  The bank made an error in recording a deposit made by the company.

Question 15

A petty cash fund was originally established with a check for $150 On September 10,the petty cash fund was replenished when there was $4.25 remaining and there were petty cash receipts for postage,$43.50; supplies,$51.85; and equipment repair,$49.00.
Required:
Prepare the journal entry,if any,required,to record the replenishment of the petty cash fund on December 31.

Accepted Answer

The answer of A petty cash fund was originally established...

Question 16

Maple Industries Inc.deposits all cash receipts on the day when they are received and it makes all cash payments by check.At the close of business on December 31,its Cash account shows a debit balance of $18,303.The company's bank statement as of June 30 shows an ending cash balance of $15,921.The following information was also available.
-Outstanding checks as of December 31 total $2,261.
-Included with the bank statement was a debit memo in the amount of $35 for service charges.
-Check No.2519,listed with the canceled checks,was correctly drawn for $805 in payment of a utility bill on December 16.The company mistakenly recorded it with a debit to Utilities Expense and a credit to Cash in the amount of $850.
-The December 31 cash receipts of $3,425 were placed in the bank's night depository after banking hours and were not recorded on the December 31 bank statement.
-The bank deducted $1,228 for an NSF check from a customer deposited on December 10.
Required:
Prepare the bank reconciliation as of December 31.

Accepted Answer

The answer of Maple Industries Inc.deposits all cash receipts on...

Question 17

Deposits in transit have:

Accepted Answer

A)  been recorded by the company but not yet by the bank. 
B)  been recorded by the bank but not yet by the company. 
C)  not been recorded by the bank or the company. 
D)  been recorded by both the bank and the company. 
A)  been recorded by the company but not yet by the bank. 
B)  been recorded by the bank but not yet by the company. 
C)  not been recorded by the bank or the company. 
D)  been recorded by both the bank and the company.

Question 18

Which of the following is not a reason that a business needs an effective internal control system?

Accepted Answer

A)  Ensure that work is completed efficiently and effectively 
B)  Produce reliable and timely accounting information for use by people external to the organization 
C)  Protect assets by reducing the risk of fraud 
D)  Identify ways to circumvent applicable laws and regulations 
A)  Ensure that work is completed efficiently and effectively 
B)  Produce reliable and timely accounting information for use by people external to the organization 
C)  Protect assets by reducing the risk of fraud 
D)  Identify ways to circumvent applicable laws and regulations

Question 19

A company plans to decrease a $200 petty cash fund to $75.The current balance in the account includes $35 in receipts and $165 in currency.The entry to reduce the size of the petty cash fund will include a:

Accepted Answer

A) credit to Cash for $90. 
B) debit to Cash for $90. 
C) debit to Petty Cash for $35. 
D) debit to Petty Cash for $75. 
A) credit to Cash for $90. 
B) debit to Cash for $90. 
C) debit to Petty Cash for $35. 
D) debit to Petty Cash for $75.

Question 20

The services provided by banks help businesses to control cash by meeting all of the following control objectives except:

Accepted Answer

A)  document procedures. 
B)  independently verify. 
C)  segregate duties. 
D)  restrict access. 
A)  document procedures. 
B)  independently verify. 
C)  segregate duties. 
D)  restrict access.

Which of the following is not an internal control procedure relating to cash payments?

Research has found that three factors exist when fraud occurs.Which of the following is not one of the three factors of the fraud triangle?

This month's bank statement includes a check from a customer that was marked NSF.How would this item be treated on the bank reconciliation? Is it added to or deducted from the bank balance or the company's cash (book)balance?

Petty cash payments are recorded in the accounting system when:

On April 1,a company established a petty cash fund of $1,000. Required: Prepare the journal entry,if any,required on April 1.

The account Cash Overage is which type of account?

Considering current laws that deal with misstatements of financial results,which of the following statements is correct?

The attitude that people in the organization hold regarding internal control is referred to as the:

The bank will show a customer's withdrawal as a:

A voucher system employs various forms of documentation related to steps in the control over cash.Which of the following is not a document in the voucher system?

A collection of documents prepared in the process of approving,processing and documenting all purchases and payment made on account is referred to as a:

Cash equivalents are short-term,highly liquid investments purchased within one year of maturity.

Which of the following would not cause the bank balance to differ from the cash balance in the accounting records?

Deposits in transit have:

Which of the following is not a reason that a business needs an effective internal control system?

A company plans to decrease a $200 petty cash fund to $75.The current balance in the account includes $35 in receipts and $165 in currency.The entry to reduce the size of the petty cash fund will include a:

The services provided by banks help businesses to control cash by meeting all of the following control objectives except:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 5: Fraud, Internal Control, and Cash

Which of the following is not an internal control procedure relating to cash payments?

Research has found that three factors exist when fraud occurs.Which of the following is not one of the three factors of the fraud triangle?

This month's bank statement includes a check from a customer that was marked NSF.How would this item be treated on the bank reconciliation? Is it added to or deducted from the bank balance or the company's cash (book)balance?

Petty cash payments are recorded in the accounting system when:

On April 1,a company established a petty cash fund of $1,000. Required: Prepare the journal entry,if any,required on April 1.

The account Cash Overage is which type of account?

Considering current laws that deal with misstatements of financial results,which of the following statements is correct?

The attitude that people in the organization hold regarding internal control is referred to as the:

The bank will show a customer's withdrawal as a:

A voucher system employs various forms of documentation related to steps in the control over cash.Which of the following is not a document in the voucher system?

A collection of documents prepared in the process of approving,processing and documenting all purchases and payment made on account is referred to as a:

Cash equivalents are short-term,highly liquid investments purchased within one year of maturity.

Which of the following would not cause the bank balance to differ from the cash balance in the accounting records?

Deposits in transit have:

Which of the following is not a reason that a business needs an effective internal control system?

A company plans to decrease a $200 petty cash fund to $75.The current balance in the account includes $35 in receipts and $165 in currency.The entry to reduce the size of the petty cash fund will include a:

The services provided by banks help businesses to control cash by meeting all of the following control objectives except:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters