Question 1

Internal and external auditors are part of which of the following components of internal control?

Accepted Answer

A)  Monitoring controls 
B)  Information systems 
C)  Control procedures 
D)  Control environment 
A)  Monitoring controls 
B)  Information systems 
C)  Control procedures 
D)  Control environment

Question 2

Before signing a check,the controller or the treasurer should examine the purchase order,the invoice,and the receiving report to determine that the company received the goods and that the company is paying only for the goods received.

Accepted Answer

A) True 
 B)False

Question 3

If a system of internal controls is too strict or complex,it may harm efficiency and not be cost-effective.

Accepted Answer

A) True 
 B)False

Question 4

When designing a system of internal control,every procedure should be implemented strictly and properly,regardless of the cost.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is a requirement of the Sarbanes-Oxley Act?

Accepted Answer

A)  The outside auditor must issue an internal control report for each public company. 
B)  The Public Company Oversight Board must conduct audits of public companies. 
C)  Accounting firms may not both audit a public client and provide certain consulting services for the same client. 
D)  The Public Company Oversight Board must create new accounting standards. 
A)  The outside auditor must issue an internal control report for each public company. 
B)  The Public Company Oversight Board must conduct audits of public companies. 
C)  Accounting firms may not both audit a public client and provide certain consulting services for the same client. 
D)  The Public Company Oversight Board must create new accounting standards.

Question 6

Keeping office supplies under lock and key is representative of:

Accepted Answer

A)  safeguarding assets. 
B)  following company policies. 
C)  promoting operations efficiency. 
D)  ensuring accurate, reliable accounting records. 
A)  safeguarding assets. 
B)  following company policies. 
C)  promoting operations efficiency. 
D)  ensuring accurate, reliable accounting records.

Question 7

In a bank reconciliation,outstanding checks will be shown on the bank side of the reconciliation.

Accepted Answer

A) True 
 B)False

Question 8

A pharmaceutical company testing drugs to determine possible side effects is a part of:

Accepted Answer

A)  monitoring controls. 
B)  information systems. 
C)  control procedures. 
D)  risk assessment. 
A)  monitoring controls. 
B)  information systems. 
C)  control procedures. 
D)  risk assessment.

Question 9

External auditors monitor company controls to safeguard assets and ensure that employees are following company policies.

Accepted Answer

A) True 
 B)False

Question 10

Please refer to the following bank reconciliation: $\begin{array}{lr}
\begin{array}{lr}
\text { BANK }\
\hline\text { Balance, June } 30,2014 & \$ 10,241.43 \
\text { ADD: } & \
\text { Deposit in transit } & 5,113.40 \
\
\
\text { LESS: } & \
\text { Outstanding Check\# 506 } & (1,948.52)\
\text { Outstanding Check\# 510 } & (1,800.25)  \
\
\text { Adjusted balance, June 30,2014 }&\underline{ \$ 11,606.06 }\
\end{array}
\begin{array}{|lr}
\text { BOOK }\
\hline \text { Balance, June } 30,2014 & \$ 9,745.06 \
\text { ADD: } & \
\text { Note collected by bank } &1,900.00  \ 
\text { Interest revenue } & 75.00 \
& \
\text { LESS: } & \
\text { NSF check } &(79.00) \
\text { Bank service charge } & (35.00)  \
\
\text { Adjusted balance, June } 30,2014 & \underline{\$ 11,606.06} \

\end{array}
\end{array}$

- Please prepare the adjusting entry for the third reconciling item (NSF check.)
 $$\begin{array} { | l | r | r | } 
\hline \quad\quad\quad&\quad&\quad \
\hline \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | r | r

Question 11

The journal entry to replenish a petty cash fund includes a debit to the petty cash account and a credit to the expense account.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following items is NOT required to be examined by the controller or treasurer before signing a check?

Accepted Answer

A)  The invoice 
B)  The purchase order 
C)  The receiving report 
D)  The journal entry 
A)  The invoice 
B)  The purchase order 
C)  The receiving report 
D)  The journal entry

Question 13

In the following situation,which internal control procedure needs strengthening?
- Hofstra Services hired a new clerk to keep custody of and maintain all the equipment in the equipment yard.That employee has not yet been adequately trained on the maintenance needs of the equipment.

Accepted Answer

A)  Assignment of responsibilities 
B)  Competent, reliable, and ethical personnel 
C)  Separation of duties 
D)  Documents 
A)  Assignment of responsibilities 
B)  Competent, reliable, and ethical personnel 
C)  Separation of duties 
D)  Documents

Question 14

If the bank reconciliation includes a deposit in transit,a journal entry is required which includes a debit to cash.

Accepted Answer

A) True 
 B)False

Question 15

If the bank reconciliation includes a book error,no journal entries are required.

Accepted Answer

A) True 
 B)False

Question 16

Cash in the bank is more liquid than a petty cash fund.

Accepted Answer

A) True 
 B)False

Question 17

A company urgently needs to repair its fire alarm system,which will cost $6,000.The two senior managers who are authorized to approve payments over $5,000 are both on holiday and cannot be reached.The office manager is only authorized to approve payments up to $5,000,but is concerned about the risks and safety factors involved,and wants to have the repair work done immediately.She asks if the contractor could split up the repair bill into two separate invoices,one for parts,and one for labor,so that she could approve both of them separately,and get the work done right away.This action would not be considered unethical,as long as the office manager does not violate specific company rules,or deliberately misrepresent the facts of the situation.

Accepted Answer

A) True 
 B)False

Question 18

The following information is available for Andersen Company for the month ending June 30,2013.
• Balance per the bank statement is $10,241.43.
• Balance per books is $9,745.06.
• Check #506 for $1,948.52 and check #510 for $1,800.25 were not returned with the June 30 bank statement.
• A deposit in transit of $5,113.40 had not been received by the bank when the bank statement was generated.
• A bank debit memo indicated an NSF check in the amount of $79 written by Bruce Garrett to Andersen Company on June 13.
• A bank credit memo indicated a note collected by the bank of $1,900 and interest revenue of $75 on June 20.
• The bank statement indicated service charges of $35.
Prepare a bank reconciliation for Andersen Company for June 30,2013 in the format shown below. $$\begin{array} { l | l } 
\text { BANK } & \text { BOOK } \
\hline & \
& \
&
\end{array}$$

Accepted Answer

This question is not

Question 19

The following information is needed to reconcile the cash balance for Woods Paper Products.
• A deposit of $5,794.62 is in transit.
• Outstanding checks total $1,533.25.
• The book balance is $5,695.62.
• The bookkeeper recorded a $1,524.00 check as $15,240 in payment of the current month's rent.
• The bank balance at February 28,2008 was $16,500.25.
• A deposit of $300 was credited by the bank for $3,000.
• A customer's check for $1,280 was returned for nonsufficient funds.
• The bank service charge is $70.
-
What was the adjusted book balance?

Accepted Answer

A)  $6,670.38 
B)  $18,061.62 
C)  $20,761.62 
D)  $10,140.24 
A)  $6,670.38 
B)  $18,061.62 
C)  $20,761.62 
D)  $10,140.24

Question 20

In a bank reconciliation,a book error will be shown on the bank side of the reconciliation.

Accepted Answer

A) True 
 B)False

Internal and external auditors are part of which of the following components of internal control?

Before signing a check,the controller or the treasurer should examine the purchase order,the invoice,and the receiving report to determine that the company received the goods and that the company is paying only for the goods received.

If a system of internal controls is too strict or complex,it may harm efficiency and not be cost-effective.

When designing a system of internal control,every procedure should be implemented strictly and properly,regardless of the cost.

Which of the following is a requirement of the Sarbanes-Oxley Act?

Keeping office supplies under lock and key is representative of:

In a bank reconciliation,outstanding checks will be shown on the bank side of the reconciliation.

A pharmaceutical company testing drugs to determine possible side effects is a part of:

External auditors monitor company controls to safeguard assets and ensure that employees are following company policies.

The journal entry to replenish a petty cash fund includes a debit to the petty cash account and a credit to the expense account.

Which of the following items is NOT required to be examined by the controller or treasurer before signing a check?

In the following situation,which internal control procedure needs strengthening? - Hofstra Services hired a new clerk to keep custody of and maintain all the equipment in the equipment yard.That employee has not yet been adequately trained on the maintenance needs of the equipment.

If the bank reconciliation includes a deposit in transit,a journal entry is required which includes a debit to cash.

If the bank reconciliation includes a book error,no journal entries are required.

Cash in the bank is more liquid than a petty cash fund.

In a bank reconciliation,a book error will be shown on the bank side of the reconciliation.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Receivables

Plant Assets and Intangibles

Current Liabilities and Payroll

Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

Filters

Exam 7: Internal Control and Cash

Internal and external auditors are part of which of the following components of internal control?

Before signing a check,the controller or the treasurer should examine the purchase order,the invoice,and the receiving report to determine that the company received the goods and that the company is paying only for the goods received.

If a system of internal controls is too strict or complex,it may harm efficiency and not be cost-effective.

When designing a system of internal control,every procedure should be implemented strictly and properly,regardless of the cost.

Which of the following is a requirement of the Sarbanes-Oxley Act?

Keeping office supplies under lock and key is representative of:

In a bank reconciliation,outstanding checks will be shown on the bank side of the reconciliation.

A pharmaceutical company testing drugs to determine possible side effects is a part of:

External auditors monitor company controls to safeguard assets and ensure that employees are following company policies.

The journal entry to replenish a petty cash fund includes a debit to the petty cash account and a credit to the expense account.

Which of the following items is NOT required to be examined by the controller or treasurer before signing a check?

In the following situation,which internal control procedure needs strengthening? - Hofstra Services hired a new clerk to keep custody of and maintain all the equipment in the equipment yard.That employee has not yet been adequately trained on the maintenance needs of the equipment.

If the bank reconciliation includes a deposit in transit,a journal entry is required which includes a debit to cash.

If the bank reconciliation includes a book error,no journal entries are required.

Cash in the bank is more liquid than a petty cash fund.

In a bank reconciliation,a book error will be shown on the bank side of the reconciliation.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Receivables

Plant Assets and Intangibles

Current Liabilities and Payroll

Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

Filters