Question 1

The objectives of a company's system of internal control include which of the following?

Accepted Answer

A) Providing innovative products. 
B) Retaining position as market leader. 
C) Adhering to laws and regulations. 
D) Ensuring the company's stock price provides a reasonable return to investors. 
A) Providing innovative products. 
B) Retaining position as market leader. 
C) Adhering to laws and regulations. 
D) Ensuring the company's stock price provides a reasonable return to investors.

Question 2

When preparing this month's bank reconciliation,you find that you failed to record a $1,240 deposit for a payment you received from a customer.You immediately prepare a journal entry to record the deposit.Which of the following describes the actions to be taken when preparing next month's bank reconciliation?

Accepted Answer

A) You must decrease the balance per bank by $1,240. 
B) You must increase the balance per bank by $1,240. 
C) You must increase the balance per books by $1,240. 
D) No further action is necessary. 
A) You must decrease the balance per bank by $1,240. 
B) You must increase the balance per bank by $1,240. 
C) You must increase the balance per books by $1,240. 
D) No further action is necessary.

Question 3

The amount of cash available for deposit at the bank is determined from the:

Accepted Answer

A) income statement. 
B) bank reconciliation. 
C) cash count sheet. 
D) unadjusted trial balance. 
A) income statement. 
B) bank reconciliation. 
C) cash count sheet. 
D) unadjusted trial balance.

Question 4

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?

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 5

On October 31,2018,the bank statement shows that your company has $12,956.73 in its checking account.You are aware of three outstanding checks that total $2,112.19.During October,2018,the bank rejected two deposited checks from customers totaling $654.19 because of insufficient funds and charged you $12.00 in service fees.You had not yet received notice about the bad checks,but you were aware of and have recorded the $12.00 of service fees.Prior to adjustment on October 31,2018,your Cash account would have a balance of:

Accepted Answer

A) $14,402.73. 
B) $15,711.11. 
C) $11,498.73. 
D) $10,202.35. 
A) $14,402.73. 
B) $15,711.11. 
C) $11,498.73. 
D) $10,202.35.

Question 6

Which of the following was passed by Congress in response to financial statement frauds that occurred in the early 2000s?

Accepted Answer

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

Question 7

Which of the following is not related to the segregation of duties for cash received in person?

Accepted Answer

A) Cashiers are responsible for the collection of cash and issuing a receipt at the point of sale. 
B) A supervisor is responsible for collecting the cash at the end of each cashier's shift and depositing it in the bank. 
C) Members of the accounting department are responsible for ensuring that the receipts from cash sales are properly recorded in the accounting system. 
D) Members of the accounting department count the cash collected and deposit it in the bank. 
A) Cashiers are responsible for the collection of cash and issuing a receipt at the point of sale. 
B) A supervisor is responsible for collecting the cash at the end of each cashier's shift and depositing it in the bank. 
C) Members of the accounting department are responsible for ensuring that the receipts from cash sales are properly recorded in the accounting system. 
D) Members of the accounting department count the cash collected and deposit it in the bank.

Question 8

In a bank reconciliation,an outstanding check is:

Accepted Answer

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

Question 9

Which of the following would overstate a company's net income?

Accepted Answer

A) Counting shipments of customers' orders as revenue before payment has been received. 
B) Shipping goods to customers without receiving orders from those customers,and recording the transactions as revenue. 
C) Accruing liabilities for marketing expenses before they are incurred. 
D) Making an accrual adjusting entry for interest earned on a bond investment. 
A) Counting shipments of customers' orders as revenue before payment has been received. 
B) Shipping goods to customers without receiving orders from those customers,and recording the transactions as revenue. 
C) Accruing liabilities for marketing expenses before they are incurred. 
D) Making an accrual adjusting entry for interest earned on a bond investment.

Question 10

Comparing the cash in the register with the cash count sheet is required by the internal control principle of:

Accepted Answer

A) independently verifying. 
B) establishing responsibilities. 
C) segregation of duties. 
D) documenting procedures. 
A) independently verifying. 
B) establishing responsibilities. 
C) segregation of duties. 
D) documenting procedures.

Question 11

The cash count sheet determines all of the following except the:

Accepted Answer

A) cash shortage or overage,if any. 
B) amount of cash available for deposit in the bank. 
C) amount of cash to be reported on the balance sheet. 
D) amount of cash received. 
A) cash shortage or overage,if any. 
B) amount of cash available for deposit in the bank. 
C) amount of cash to be reported on the balance sheet. 
D) amount of cash received.

Question 12

The entry recorded when the petty cash fund is replenished includes a debit to Petty Cash and a credit to Cash.

Accepted Answer

A) True 
 B)False

Question 13

On a bank statement,deposits are listed as credits and cleared checks are listed as debits.

Accepted Answer

A) True 
 B)False

Question 14

A good voucher system includes procedures and approvals designed to control cash payments.

Accepted Answer

A) True 
 B)False

Question 15

The Sarbanes-Oxley Act (SOX)requires external auditors to test the company's internal control system.

Accepted Answer

A) True 
 B)False

Question 16

If a bank reconciliation included a deposit in transit of $1,240,the company's journal entry for this reconciling item would include:

Accepted Answer

A) nothing,because the deposit has already been recorded. 
B) a debit to Cash of $1,240. 
C) a credit to Cash of $1,240. 
D) a credit to Accounts Receivable for $1,240. 
A) nothing,because the deposit has already been recorded. 
B) a debit to Cash of $1,240. 
C) a credit to Cash of $1,240. 
D) a credit to Accounts Receivable for $1,240.

Question 17

Which of the following statements incorrectly describes an imprest system?

Accepted Answer

A) An imprest system is an internal control procedure relating to cash payments. 
B) An imprest system helps eliminate the risk that the bank might overpay or underpay an employee. 
C) The use of an imprest system eliminates the need for bank reconciliations. 
D) If the transfers from the payroll account to the employees' checking accounts occur without error,the imprest payroll bank account will equal zero after all employees have been paid. 
A) An imprest system is an internal control procedure relating to cash payments. 
B) An imprest system helps eliminate the risk that the bank might overpay or underpay an employee. 
C) The use of an imprest system eliminates the need for bank reconciliations. 
D) If the transfers from the payroll account to the employees' checking accounts occur without error,the imprest payroll bank account will equal zero after all employees have been paid.

Question 18

Restricted cash is reported:

Accepted Answer

A) separately as an asset on the balance sheet. 
B) together with cash and cash equivalents on the balance sheet. 
C) separately under stockholders' equity on the balance sheet. 
D) together with cash and cash equivalents on the income statement. 
A) separately as an asset on the balance sheet. 
B) together with cash and cash equivalents on the balance sheet. 
C) separately under stockholders' equity on the balance sheet. 
D) together with cash and cash equivalents on the income statement.

Question 19

All of the following are requirements of the Sarbanes-Oxley Act (SOX)except:

Accepted Answer

A) evaluation and reporting on the effectiveness of internal control over financial reporting by management for all public companies. 
B) evaluation and reporting on the effectiveness of internal control over financial reporting by external auditors only for large public companies. 
C) establishment of an audit committee of independent directors to ensure the company's accounting,internal control,and audit functions are effective. 
D) adoption of a code of ethics covering all employees. 
A) evaluation and reporting on the effectiveness of internal control over financial reporting by management for all public companies. 
B) evaluation and reporting on the effectiveness of internal control over financial reporting by external auditors only for large public companies. 
C) establishment of an audit committee of independent directors to ensure the company's accounting,internal control,and audit functions are effective. 
D) adoption of a code of ethics covering all employees.

Question 20

Assume a voucher system is in use.When the bill for goods or services is obtained,which control principle(s)must be met when the related control procedures are designed?

Accepted Answer

A) Establish responsibility 
B) Segregate duties 
C) Segregate duties and restrict access 
D) Document procedures and independently verify 
A) Establish responsibility 
B) Segregate duties 
C) Segregate duties and restrict access 
D) Document procedures and independently verify

The objectives of a company's system of internal control include which of the following?

The amount of cash available for deposit at the bank is determined from the:

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?

Which of the following was passed by Congress in response to financial statement frauds that occurred in the early 2000s?

Which of the following is not related to the segregation of duties for cash received in person?

In a bank reconciliation,an outstanding check is:

Which of the following would overstate a company's net income?

Comparing the cash in the register with the cash count sheet is required by the internal control principle of:

The cash count sheet determines all of the following except the:

The entry recorded when the petty cash fund is replenished includes a debit to Petty Cash and a credit to Cash.

On a bank statement,deposits are listed as credits and cleared checks are listed as debits.

A good voucher system includes procedures and approvals designed to control cash payments.

The Sarbanes-Oxley Act (SOX)requires external auditors to test the company's internal control system.

If a bank reconciliation included a deposit in transit of $1,240,the company's journal entry for this reconciling item would include:

Which of the following statements incorrectly describes an imprest system?

Restricted cash is reported:

All of the following are requirements of the Sarbanes-Oxley Act (SOX)except:

Assume a voucher system is in use.When the bill for goods or services is obtained,which control principle(s)must be met when the related control procedures are designed?

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 objectives of a company's system of internal control include which of the following?

The amount of cash available for deposit at the bank is determined from the:

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?

Which of the following was passed by Congress in response to financial statement frauds that occurred in the early 2000s?

Which of the following is not related to the segregation of duties for cash received in person?

In a bank reconciliation,an outstanding check is:

Which of the following would overstate a company's net income?

Comparing the cash in the register with the cash count sheet is required by the internal control principle of:

The cash count sheet determines all of the following except the:

The entry recorded when the petty cash fund is replenished includes a debit to Petty Cash and a credit to Cash.

On a bank statement,deposits are listed as credits and cleared checks are listed as debits.

A good voucher system includes procedures and approvals designed to control cash payments.

The Sarbanes-Oxley Act (SOX)requires external auditors to test the company's internal control system.

If a bank reconciliation included a deposit in transit of $1,240,the company's journal entry for this reconciling item would include:

Which of the following statements incorrectly describes an imprest system?

Restricted cash is reported:

All of the following are requirements of the Sarbanes-Oxley Act (SOX)except:

Assume a voucher system is in use.When the bill for goods or services is obtained,which control principle(s)must be met when the related control procedures are designed?

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