Question 1

The purpose of internal controls includes all of the following except:

Accepted Answer

A) improving efficiency. 
B) producing timely accounting information. 
C) minimizing errors. 
D) completely eliminating fraud. 
A) improving efficiency. 
B) producing timely accounting information. 
C) minimizing errors. 
D) completely eliminating fraud.

Question 2

Assume that the custodian of a $540 petty cash fund has $75 in currency and coins plus $465 in receipts at the end of the month.The entry to replenish the petty cash fund will include a:

Accepted Answer

A) debit to Cash for $465. 
B) debit to Petty Cash for $465. 
C) credit to Petty Cash for $465. 
D) credit to Cash for $465. 
A) debit to Cash for $465. 
B) debit to Petty Cash for $465. 
C) credit to Petty Cash for $465. 
D) credit to Cash for $465.

Question 3

The entry to record to replenishing the petty cash fund involves debiting ________ and crediting________.

Accepted Answer

A) expense accounts;Cash 
B) Petty Cash;Petty Cash Expense 
C) Petty Cash;Cash 
D) Petty Cash Expense;expense accounts 
A) expense accounts;Cash 
B) Petty Cash;Petty Cash Expense 
C) Petty Cash;Cash 
D) Petty Cash Expense;expense accounts

Question 4

Outstanding checks written by the company should be a(n)________ on the company's bank reconciliation.

Accepted Answer

A) deduction from the book balance 
B) deduction from the bank balance 
C) addition to the book balance 
D) addition to the bank balance 
A) deduction from the book balance 
B) deduction from the bank balance 
C) addition to the book balance 
D) addition to the bank balance

Question 5

Match the term to the appropriate definition.There are more definitions than terms.
-Internal Control

Accepted Answer

A) A set of regulations passed by Congress in 2002 in an attempt to improve financial reporting and restore investor confidence. 
B) A process for approving and documenting all purchases and payments on account. 
C) An attempt to deceive others for personal gain. 
D) Terms of a loan agreement that if broken,entitle the lender to renegotiate loan terms or force repayment. 
E) Short-term,highly liquid investments purchased within three months of maturity.
F)Another name for bounced checks.They arise when the check writer (your customer)does not have sufficient funds to cover the amount of the check.
G)An internal report prepared to verify the accuracy of both the bank statement and the cash accounts of a business or individual.
H)Actions taken to promote efficient and effective operations,protect assets,enhance accounting information,and adhere to laws and regulations.
I)An internal control designed into the accounting system to prevent an employee from making a mistake or committing a dishonest act as part of one assigned duty and then also covering it up through another assigned duty.
J)Not available for general use but rather restricted for a specific purpose.
K)A process that controls the amount paid to others by limiting the total amount of money available for making payments to others.
L)Money or any instrument that banks will accept for deposit and immediately credit to a company's account. 
A) A set of regulations passed by Congress in 2002 in an attempt to improve financial reporting and restore investor confidence. 
B) A process for approving and documenting all purchases and payments on account. 
C) An attempt to deceive others for personal gain. 
D) Terms of a loan agreement that if broken,entitle the lender to renegotiate loan terms or force repayment. 
E) Short-term,highly liquid investments purchased within three months of maturity.
F)Another name for bounced checks.They arise when the check writer (your customer)does not have sufficient funds to cover the amount of the check.
G)An internal report prepared to verify the accuracy of both the bank statement and the cash accounts of a business or individual.
H)Actions taken to promote efficient and effective operations,protect assets,enhance accounting information,and adhere to laws and regulations.
I)An internal control designed into the accounting system to prevent an employee from making a mistake or committing a dishonest act as part of one assigned duty and then also covering it up through another assigned duty.
J)Not available for general use but rather restricted for a specific purpose.
K)A process that controls the amount paid to others by limiting the total amount of money available for making payments to others.
L)Money or any instrument that banks will accept for deposit and immediately credit to a company's account.

Question 6

A process for approving and documenting all purchases and payments on account is:

Accepted Answer

A) the remittance process. 
B) an imprest system. 
C) a voucher system. 
D) the bank reconciliation. 
A) the remittance process. 
B) an imprest system. 
C) a voucher system. 
D) the bank reconciliation.

Question 7

Match the term to the appropriate definition.There are more definitions than terms.
-Fraud

Accepted Answer

A) A set of regulations passed by Congress in 2002 in an attempt to improve financial reporting and restore investor confidence. 
B) A process for approving and documenting all purchases and payments on account. 
C) An attempt to deceive others for personal gain. 
D) Terms of a loan agreement that if broken,entitle the lender to renegotiate loan terms or force repayment. 
E) Short-term,highly liquid investments purchased within three months of maturity.
F)Another name for bounced checks.They arise when the check writer (your customer)does not have sufficient funds to cover the amount of the check.
G)An internal report prepared to verify the accuracy of both the bank statement and the cash accounts of a business or individual.
H)Actions taken to promote efficient and effective operations,protect assets,enhance accounting information,and adhere to laws and regulations.
I)An internal control designed into the accounting system to prevent an employee from making a mistake or committing a dishonest act as part of one assigned duty and then also covering it up through another assigned duty.
J)Not available for general use but rather restricted for a specific purpose.
K)A process that controls the amount paid to others by limiting the total amount of money available for making payments to others.
L)Money or any instrument that banks will accept for deposit and immediately credit to a company's account. 
A) A set of regulations passed by Congress in 2002 in an attempt to improve financial reporting and restore investor confidence. 
B) A process for approving and documenting all purchases and payments on account. 
C) An attempt to deceive others for personal gain. 
D) Terms of a loan agreement that if broken,entitle the lender to renegotiate loan terms or force repayment. 
E) Short-term,highly liquid investments purchased within three months of maturity.
F)Another name for bounced checks.They arise when the check writer (your customer)does not have sufficient funds to cover the amount of the check.
G)An internal report prepared to verify the accuracy of both the bank statement and the cash accounts of a business or individual.
H)Actions taken to promote efficient and effective operations,protect assets,enhance accounting information,and adhere to laws and regulations.
I)An internal control designed into the accounting system to prevent an employee from making a mistake or committing a dishonest act as part of one assigned duty and then also covering it up through another assigned duty.
J)Not available for general use but rather restricted for a specific purpose.
K)A process that controls the amount paid to others by limiting the total amount of money available for making payments to others.
L)Money or any instrument that banks will accept for deposit and immediately credit to a company's account.

Question 8

When the petty cash fund is replenished:

Accepted Answer

A) Cash is debited. 
B) Petty Cash is credited. 
C) Petty Cash is debited. 
D) Appropriate expense accounts are debited. 
A) Cash is debited. 
B) Petty Cash is credited. 
C) Petty Cash is debited. 
D) Appropriate expense accounts are debited.

Question 9

The following information is available for the Tierney Company for the month of November.
On November 30,after all transactions have been recorded,the balance in the company's Cash account has a balance of $27,202.
The company's bank statement shows a balance on November 30 of $29,279.
Outstanding checks at November 30 include check #3030 in the amount of $1,525 and check #3556 in the amount of $1,459.
Included with the bank statement was a credit memo in the amount of $770 for an EFT in payment of a customer's account.
The bank deducted $67 for an NSF check from a customer deposited on November 22.
A deposit placed in the bank's night depository on November 30 totaled $1,675 and did not appear on the bank statement.
Examination of the checks on the bank statement with the entries in the accounting records reveals that check #3445 for the payment of an account payable was correctly written for $2,450,but was recorded in the accounting records as $2,540.
Included with the bank statement was a debit memorandum in the amount of $25 for bank service charges.
Required:
Prepare a bank reconciliation for Tierney Company as of November 30.

Accepted Answer

The answer of The following information is available for the...

Question 10

Which of the following is not one of the control components that are part of the framework used when analyzing an internal control system?

Accepted Answer

A) control environment 
B) monitoring activities 
C) information and communication 
D) independent verifications 
A) control environment 
B) monitoring activities 
C) information and communication 
D) independent verifications

Question 11

The Grass is Greener Company borrows money from a bank.Part of the loan agreement requires Grass is Greener to maintain stockholders' equity of at least 40% of assets or otherwise to pay a higher interest rate.This requirement is referred to as a:

Accepted Answer

A) loan covenant. 
B) credit rating. 
C) bond rating. 
D) call feature. 
A) loan covenant. 
B) credit rating. 
C) bond rating. 
D) call feature.

Question 12

A company's cash receipts procedures include the following.Cashiers collect cash and issue a receipt at the point of sale.Supervisors take custody of the cash at the end of each cashier's shift and deposit it in the bank.Accounting staff then ensure the receipts from cash sales are properly recorded in the accounting system.Which internal control principle is most evident with these procedures?

Accepted Answer

A) Restrict access 
B) Segregate duties 
C) Document procedures 
D) Independently verify 
A) Restrict access 
B) Segregate duties 
C) Document procedures 
D) Independently verify

Question 13

If a company hires an auditor to check that the work done by others within the company is supported by documentation,it is doing so under the principle of control activities referred to as:

Accepted Answer

A) independent verification. 
B) segregation of duties. 
C) restrict access. 
D) document procedures. 
A) independent verification. 
B) segregation of duties. 
C) restrict access. 
D) document procedures.

Question 14

A check is said to have cleared the bank when:

Accepted Answer

A) it is returned NSF. 
B) it bounces. 
C) the bank withdraws the amount of the check from the check writer's account. 
D) it is presented to a financial institution for deposit or cash. 
A) it is returned NSF. 
B) it bounces. 
C) the bank withdraws the amount of the check from the check writer's account. 
D) it is presented to a financial institution for deposit or cash.

Question 15

The bank credited your account for a deposit made by another bank customer.This bank error should be a(n)________ on a bank reconciliation.

Accepted Answer

A) addition to the bank balance 
B) deduction from the bank balance 
C) addition to the book balance 
D) deduction from the book balance 
A) addition to the bank balance 
B) deduction from the bank balance 
C) addition to the book balance 
D) deduction from the book balance

Question 16

All of the following are goals of internal control except:

Accepted Answer

A) reducing the risk of fraud. 
B) producing reliable and timely accounting information for use by people internal and external to the organization. 
C) minimizing the amount of income taxes that must be paid. 
D) adhering to laws and regulations. 
A) reducing the risk of fraud. 
B) producing reliable and timely accounting information for use by people internal and external to the organization. 
C) minimizing the amount of income taxes that must be paid. 
D) adhering to laws and regulations.

Question 17

When you identify outstanding checks in performing a bank reconciliation,you must:

Accepted Answer

A) deduct the amount of the outstanding checks from the balance per books. 
B) deduct the amount of the outstanding checks from the balance per bank. 
C) add the amount of the outstanding checks to the balance per books. 
D) add the amount of the outstanding checks to the balance per bank. 
A) deduct the amount of the outstanding checks from the balance per books. 
B) deduct the amount of the outstanding checks from the balance per bank. 
C) add the amount of the outstanding checks to the balance per books. 
D) add the amount of the outstanding checks to the balance per bank.

Question 18

The following information was available to the accountant of Scarlet Co.when preparing the monthly bank reconciliation:   The amount of cash that should appear on the balance sheet following completion of the reconciliation and adjustment of the accounting records is:

Accepted Answer

A) $1,320. 
B) $1,280. 
C) $1,240. 
D) $610. 
A) $1,320. 
B) $1,280. 
C) $1,240. 
D) $610.

Question 19

The components of an internal control system include control environment,risk assessment,control activities,information and communication,and monitoring activities.

Accepted Answer

A) True 
 B)False

Question 20

The Sarbanes-Oxley Act (SOX)grants legal protection to 'whistle-blowers.'

Accepted Answer

A) True 
 B)False

The purpose of internal controls includes all of the following except:

Assume that the custodian of a $540 petty cash fund has $75 in currency and coins plus $465 in receipts at the end of the month.The entry to replenish the petty cash fund will include a:

The entry to record to replenishing the petty cash fund involves debiting and crediting.

Outstanding checks written by the company should be a(n)________ on the company's bank reconciliation.

Match the term to the appropriate definition.There are more definitions than terms. -Internal Control

A process for approving and documenting all purchases and payments on account is:

Match the term to the appropriate definition.There are more definitions than terms. -Fraud

When the petty cash fund is replenished:

Which of the following is not one of the control components that are part of the framework used when analyzing an internal control system?

The Grass is Greener Company borrows money from a bank.Part of the loan agreement requires Grass is Greener to maintain stockholders' equity of at least 40% of assets or otherwise to pay a higher interest rate.This requirement is referred to as a:

If a company hires an auditor to check that the work done by others within the company is supported by documentation,it is doing so under the principle of control activities referred to as:

A check is said to have cleared the bank when:

The bank credited your account for a deposit made by another bank customer.This bank error should be a(n)________ on a bank reconciliation.

All of the following are goals of internal control except:

When you identify outstanding checks in performing a bank reconciliation,you must:

The following information was available to the accountant of Scarlet Co.when preparing the monthly bank reconciliation: The amount of cash that should appear on the balance sheet following completion of the reconciliation and adjustment of the accounting records is:

The components of an internal control system include control environment,risk assessment,control activities,information and communication,and monitoring activities.

The Sarbanes-Oxley Act (SOX)grants legal protection to 'whistle-blowers.'

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments,Financial Statements,and Financial Results

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables,Bad Debt Expense,and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Stockholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 5: Fraud,Internal Control,and Cash

The purpose of internal controls includes all of the following except:

Assume that the custodian of a $540 petty cash fund has $75 in currency and coins plus $465 in receipts at the end of the month.The entry to replenish the petty cash fund will include a:

The entry to record to replenishing the petty cash fund involves debiting ________ and crediting________.

Outstanding checks written by the company should be a(n)________ on the company's bank reconciliation.

Match the term to the appropriate definition.There are more definitions than terms. -Internal Control

A process for approving and documenting all purchases and payments on account is:

Match the term to the appropriate definition.There are more definitions than terms. -Fraud

When the petty cash fund is replenished:

Which of the following is not one of the control components that are part of the framework used when analyzing an internal control system?

The Grass is Greener Company borrows money from a bank.Part of the loan agreement requires Grass is Greener to maintain stockholders' equity of at least 40% of assets or otherwise to pay a higher interest rate.This requirement is referred to as a:

If a company hires an auditor to check that the work done by others within the company is supported by documentation,it is doing so under the principle of control activities referred to as:

A check is said to have cleared the bank when:

The bank credited your account for a deposit made by another bank customer.This bank error should be a(n)________ on a bank reconciliation.

All of the following are goals of internal control except:

When you identify outstanding checks in performing a bank reconciliation,you must:

The following information was available to the accountant of Scarlet Co.when preparing the monthly bank reconciliation: The amount of cash that should appear on the balance sheet following completion of the reconciliation and adjustment of the accounting records is:

The components of an internal control system include control environment,risk assessment,control activities,information and communication,and monitoring activities.

The Sarbanes-Oxley Act (SOX)grants legal protection to 'whistle-blowers.'

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments,Financial Statements,and Financial Results

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables,Bad Debt Expense,and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Stockholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

The entry to record to replenishing the petty cash fund involves debiting and crediting.