Question 1

In a bank reconciliation,an EFT received from a customer is:

Accepted Answer

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

Question 2

Which one of the statements appearing below is incorrect regarding bank reconciliations?

Accepted Answer

A) A bank reconciliation is an internal report prepared to report the cash balance to investors and creditors. 
B) If a company's records show a different cash balance from that shown on the company's bank statement,either the company or the bank has made an error. 
C) After preparing a bank reconciliation,no journal entries need to be made for outstanding checks or deposits in transit. 
D) The up-to-date ending cash balance on the bank statement side will generally not equal the up-to-date ending cash balance on the book side. 
A) A bank reconciliation is an internal report prepared to report the cash balance to investors and creditors. 
B) If a company's records show a different cash balance from that shown on the company's bank statement,either the company or the bank has made an error. 
C) After preparing a bank reconciliation,no journal entries need to be made for outstanding checks or deposits in transit. 
D) The up-to-date ending cash balance on the bank statement side will generally not equal the up-to-date ending cash balance on the book side.

Question 3

A small company would have the most difficulty in implementing which of the following internal control principles?

Accepted Answer

A) Segregating duties. 
B) Restricting access to cash or information. 
C) Establishing responsibilities. 
D) Documenting procedures. 
A) Segregating duties. 
B) Restricting access to cash or information. 
C) Establishing responsibilities. 
D) Documenting procedures.

Question 4

The incentive element of the fraud triangle relates to an employee's means of committing fraud such as weaknesses in internal control.

Accepted Answer

A) True 
 B)False

Question 5

Employee fraud includes which of the following categories?

Accepted Answer

A) Covenants 
B) Incentive 
C) Corruption 
D) Rationalization 
A) Covenants 
B) Incentive 
C) Corruption 
D) Rationalization

Question 6

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

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 7

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

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

All of the following bank reconciliation items would result in a journal entry on the company's books except:

Accepted Answer

A) interest earned. 
B) outstanding checks. 
C) service charge. 
D) EFT received from a customer. 
A) interest earned. 
B) outstanding checks. 
C) service charge. 
D) EFT received from a customer.

Question 9

Which amount should be reported as cash on the balance sheet?

Accepted Answer

A) The ending cash balance per the bank statement. 
B) The beginning cash balance per the bank statement. 
C) The up-to-date ending cash balance per the bank reconciliation. 
D) The ending cash balance per the books. 
A) The ending cash balance per the bank statement. 
B) The beginning cash balance per the bank statement. 
C) The up-to-date ending cash balance per the bank reconciliation. 
D) The ending cash balance per the books.

Question 10

Urban Bloom,Inc.'s books show an ending cash balance of $18,000 before preparing the bank reconciliation.Given the bank reconciliation shows outstanding checks of $5,400,deposits in transit of $3,600,NSF check of $180,and interest earned on the bank account of $18,the company's up-to-date ending cash balance equals:

Accepted Answer

A) $17,838. 
B) $12,438. 
C) $16,038. 
D) $18,198. 
A) $17,838. 
B) $12,438. 
C) $16,038. 
D) $18,198.

Question 11

Which of the following is not a change introduced by the Sarbanes-Oxley Act?

Accepted Answer

A) Management evaluates and reports on the effectiveness of internal control over financial reporting. 
B) Publically traded companies must have their financial statements audited. 
C) The company's board of directors is required to establish an audit committee comprised of independent directors. 
D) Public companies must have tip lines that allow employees to secretly submit concerns about questionable accounting or auditing practices. 
A) Management evaluates and reports on the effectiveness of internal control over financial reporting. 
B) Publically traded companies must have their financial statements audited. 
C) The company's board of directors is required to establish an audit committee comprised of independent directors. 
D) Public companies must have tip lines that allow employees to secretly submit concerns about questionable accounting or auditing practices.

Question 12

Which of the following situations would cause the balance per bank to be more than the balance per books?

Accepted Answer

A) Deposits in transit 
B) Service charges 
C) Outstanding checks 
D) Checks from customers returned as NSF 
A) Deposits in transit 
B) Service charges 
C) Outstanding checks 
D) Checks from customers returned as NSF

Question 13

Egrane,Inc.'s monthly bank statement showed the ending balance of cash of $14,800.The bank reconciliation for the period showed an adjustment for a deposit in transit of $1,200,outstanding checks of $1,600,a NSF check of $560,bank service charges of $24 and the EFT from a customer in payment of the customer's account of $1,200. What was the cash balance on the Egrane's books (before the adjustments for items on the bank reconciliation)?

Accepted Answer

A) $14,400 
B) $13,784 
C) $15,200 
D) $16,216 
A) $14,400 
B) $13,784 
C) $15,200 
D) $16,216

Question 14

Which of the following is an example of restricting access?

Accepted Answer

A) Using prenumbered checks. 
B) Using passcodes. 
C) Giving a separate cash register to each cashier. 
D) Comparing the company's cash balance to the balance per the bank. 
A) Using prenumbered checks. 
B) Using passcodes. 
C) Giving a separate cash register to each cashier. 
D) Comparing the company's cash balance to the balance per the bank.

Question 15

McKeel Publishing had outstanding checks totaling $7,560 on its June bank reconciliation.In July,McKeel issued checks totaling $54,460.The July bank statement shows that $36,820 in checks cleared the bank in July.The amount of outstanding checks on McKeel's July bank reconciliation should be:

Accepted Answer

A) $17,640. 
B) $25,200. 
C) $7,560. 
D) $10,080. 
A) $17,640. 
B) $25,200. 
C) $7,560. 
D) $10,080.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is a set of regulations passed by Congress in 2002 in an attempt to improve financial reporting and restore investor confidence?

Accepted Answer

A) Enron Act 
B) Federal Accounting Standards Board Act 
C) Sarbanes-Oxley Act 
D) Securities and Exchange Act 
A) Enron Act 
B) Federal Accounting Standards Board Act 
C) Sarbanes-Oxley Act 
D) Securities and Exchange Act

Question 18

Outstanding checks are ________ on a bank reconciliation.

Accepted Answer

A) added to the book balance 
B) added to the bank balance 
C) deducted from the bank balance 
D) deducted from the book balance 
A) added to the book balance 
B) added to the bank balance 
C) deducted from the bank balance 
D) deducted from the book balance

Question 19

A deposit in transit on last month's bank reconciliation is shown as a deposit on the bank statement this month.As a result,in preparing this period's reconciliation,the amount of this deposit should:

Accepted Answer

A) be added to the book balance of cash. 
B) be deducted from the book balance of cash. 
C) be added to the bank balance of cash. 
D) not be included as a reconciling item. 
A) be added to the book balance of cash. 
B) be deducted from the book balance of cash. 
C) be added to the bank balance of cash. 
D) not be included as a reconciling item.

Question 20

Which of the following is one of the internal control functions performed by a cash register?

Accepted Answer

A) Comparison of cash in register with cash count sheet. 
B) Document the amount charged for each item sold. 
C) Ensure sales are properly recorded in the accounting system. 
D) Perform the bank reconciliation. 
A) Comparison of cash in register with cash count sheet. 
B) Document the amount charged for each item sold. 
C) Ensure sales are properly recorded in the accounting system. 
D) Perform the bank reconciliation.

In a bank reconciliation,an EFT received from a customer is:

Which one of the statements appearing below is incorrect regarding bank reconciliations?

A small company would have the most difficulty in implementing which of the following internal control principles?

The incentive element of the fraud triangle relates to an employee's means of committing fraud such as weaknesses in internal control.

Employee fraud includes which of the following categories?

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

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

All of the following bank reconciliation items would result in a journal entry on the company's books except:

Which amount should be reported as cash on the balance sheet?

Which of the following is not a change introduced by the Sarbanes-Oxley Act?

Which of the following situations would cause the balance per bank to be more than the balance per books?

Which of the following is an example of restricting access?

McKeel Publishing had outstanding checks totaling $7,560 on its June bank reconciliation.In July,McKeel issued checks totaling $54,460.The July bank statement shows that $36,820 in checks cleared the bank in July.The amount of outstanding checks on McKeel's July bank reconciliation should be:

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

Which of the following is a set of regulations passed by Congress in 2002 in an attempt to improve financial reporting and restore investor confidence?

Outstanding checks are ________ on a bank reconciliation.

A deposit in transit on last month's bank reconciliation is shown as a deposit on the bank statement this month.As a result,in preparing this period's reconciliation,the amount of this deposit should:

Which of the following is one of the internal control functions performed by a cash register?

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

In a bank reconciliation,an EFT received from a customer is:

Which one of the statements appearing below is incorrect regarding bank reconciliations?

A small company would have the most difficulty in implementing which of the following internal control principles?

The incentive element of the fraud triangle relates to an employee's means of committing fraud such as weaknesses in internal control.

Employee fraud includes which of the following categories?

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

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

All of the following bank reconciliation items would result in a journal entry on the company's books except:

Which amount should be reported as cash on the balance sheet?

Which of the following is not a change introduced by the Sarbanes-Oxley Act?

Which of the following situations would cause the balance per bank to be more than the balance per books?

Which of the following is an example of restricting access?

McKeel Publishing had outstanding checks totaling $7,560 on its June bank reconciliation.In July,McKeel issued checks totaling $54,460.The July bank statement shows that $36,820 in checks cleared the bank in July.The amount of outstanding checks on McKeel's July bank reconciliation should be:

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

Which of the following is a set of regulations passed by Congress in 2002 in an attempt to improve financial reporting and restore investor confidence?

Outstanding checks are ________ on a bank reconciliation.

A deposit in transit on last month's bank reconciliation is shown as a deposit on the bank statement this month.As a result,in preparing this period's reconciliation,the amount of this deposit should:

Which of the following is one of the internal control functions performed by a cash register?

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