Question 1

When a company receives customers' checks by mail:

Accepted Answer

A) all incoming mail containing checks from customers should be opened by the mailroom. 
B) the mailroom sends all customer checks to the accounting department. 
C) the remittance advices go to the treasurer for deposit. 
D) the bank deposit is prepared by the mailroom. 
A) all incoming mail containing checks from customers should be opened by the mailroom. 
B) the mailroom sends all customer checks to the accounting department. 
C) the remittance advices go to the treasurer for deposit. 
D) the bank deposit is prepared by the mailroom.

Question 2

The following are examples of items that appear on a bank reconciliation.Classify each item as (a)an addition to the bank balance, (b)a subtraction from the bank balance, (c)an addition to the book balance,or (d)a subtraction from the book balance.
1.NSF check
2.Deposits in transit
3.Interest revenue on checking account
4.Bank error - the bank credited the company's account for a deposit made by another customer
5.EFT rent collection
6.Service charge
7.Book error - the company credited cash for $100 when the correct amount was $1,000
8.Outstanding checks
9.Bank collection of a note receivable on behalf of the company

Accepted Answer

1.d,2.a,3.

Question 3

The control environment does NOT include:

Accepted Answer

A) a corporation's code of ethics. 
B) prohibition of bribes and kickbacks. 
C) risk assessment. 
D) prohibition of transactions that involve a conflict of interest. 
A) a corporation's code of ethics. 
B) prohibition of bribes and kickbacks. 
C) risk assessment. 
D) prohibition of transactions that involve a conflict of interest.

Question 4

If a bookkeeper mistakenly records a disbursement as $69 instead of the correct amount of $96,the error should be shown on the bank reconciliation as a:

Accepted Answer

A) $27 addition to the balance per books. 
B) $27 deduction from the balance per books. 
C) $165 addition to the balance per books. 
D) $165 deduction from the balance per books. 
A) $27 addition to the balance per books. 
B) $27 deduction from the balance per books. 
C) $165 addition to the balance per books. 
D) $165 deduction from the balance per books.

Question 5

All of the following will appear on the bank statement EXCEPT for:

Accepted Answer

A) checks paid and deposits made before the cutoff date on the bank statement. 
B) book errors. 
C) checks paid and deposits made after the cutoff date on the bank statement. 
D) B and C. 
A) checks paid and deposits made before the cutoff date on the bank statement. 
B) book errors. 
C) checks paid and deposits made after the cutoff date on the bank statement. 
D) B and C.

Question 6

When customer checks are received in the mail,which employees are involved in processing the checks?

Accepted Answer

A) mailroom employee,treasurer,cashier in the treasurer's department 
B) mailroom employee,accounting department employee,controller 
C) mailroom employee,accounting department employee,controller,treasurer 
D) mailroom employee,accounting department employee,controller,treasurer,cashier in the treasurer's department 
A) mailroom employee,treasurer,cashier in the treasurer's department 
B) mailroom employee,accounting department employee,controller 
C) mailroom employee,accounting department employee,controller,treasurer 
D) mailroom employee,accounting department employee,controller,treasurer,cashier in the treasurer's department

Question 7

Fraudulent financial reporting is the only type of fraud that involves making false or misleading entries in the books of the company.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following items from the bank reconciliation require a journal entry?

Accepted Answer

A) bank errors 
B) deposits in transit 
C) outstanding checks 
D) service charge by bank for printing of checks 
A) bank errors 
B) deposits in transit 
C) outstanding checks 
D) service charge by bank for printing of checks

Question 9

Payments by EFT are an important internal control for all of the following reasons EXCEPT for:

Accepted Answer

A) the EFTs provide a record of the payments. 
B) the EFT must be approved by an authorized official. 
C) all EFT payments are made by the cashier in the Accounting Department. 
D) the authorizing official should study the evidence supporting the payment before approving the EFT. 
A) the EFTs provide a record of the payments. 
B) the EFT must be approved by an authorized official. 
C) all EFT payments are made by the cashier in the Accounting Department. 
D) the authorizing official should study the evidence supporting the payment before approving the EFT.

Question 10

A company has a policy that all checks over $5,000 need to have the signature of the owner in addition to the signature of the bookkeeper.This is an example of:

Accepted Answer

A) limited access. 
B) proper approvals. 
C) adequate records. 
D) encryption. 
A) limited access. 
B) proper approvals. 
C) adequate records. 
D) encryption.

Question 11

Internal control is a plan of organization and a system of procedures designed to prevent fraud.

Accepted Answer

A) True 
 B)False

Question 12

Fraudulent financial reporting:

Accepted Answer

A) involves employee overstatement of expense reimbursement requests. 
B) involves bribes and kickbacks. 
C) involves stealing assets from the company. 
D) deceives investors into investing. 
A) involves employee overstatement of expense reimbursement requests. 
B) involves bribes and kickbacks. 
C) involves stealing assets from the company. 
D) deceives investors into investing.

Question 13

A fidelity bond is a(n):

Accepted Answer

A) employment contract for a specified period of time. 
B) insurance policy that reimburses a company for any losses due to employee theft. 
C) contract prohibiting former employees from working for a competitor. 
D) promise by a company to safeguard customers' personal information. 
A) employment contract for a specified period of time. 
B) insurance policy that reimburses a company for any losses due to employee theft. 
C) contract prohibiting former employees from working for a competitor. 
D) promise by a company to safeguard customers' personal information.

Question 14

The book side of a bank reconciliation includes:

Accepted Answer

A) deposits in transit,bank collections and NSF checks. 
B) NSF checks,bank collections of notes receivable and interest earned on the checking account. 
C) outstanding checks and deposits in transit. 
D) outstanding checks,NSF checks and cost of printed checks. 
A) deposits in transit,bank collections and NSF checks. 
B) NSF checks,bank collections of notes receivable and interest earned on the checking account. 
C) outstanding checks and deposits in transit. 
D) outstanding checks,NSF checks and cost of printed checks.

Question 15

Which of the following transactions requires a journal entry?

Accepted Answer

A) The bank charged $50 for a stop payment on a check. 
B) The bank deducted $50 from your account in error which they will fix. 
C) The bank collected a note receivable with interest on your behalf. 
D) A and C 
A) The bank charged $50 for a stop payment on a check. 
B) The bank deducted $50 from your account in error which they will fix. 
C) The bank collected a note receivable with interest on your behalf. 
D) A and C

Question 16

Enron Corporation committed fraudulent financial reporting by:

Accepted Answer

A) reporting expenses as plant assets. 
B) overstating profits through bogus sales of nonexistent assets with inflated values. 
C) bribing employees of the Securities and Exchange Commission. 
D) all of the above 
A) reporting expenses as plant assets. 
B) overstating profits through bogus sales of nonexistent assets with inflated values. 
C) bribing employees of the Securities and Exchange Commission. 
D) all of the above

Question 17

Because cash equivalents are less liquid than cash,they cannot be reported along with cash.

Accepted Answer

A) True 
 B)False

Question 18

Hill Company established a petty cash fund of $500.The first transaction was the purchase of stamps for $46.Which of the following statements is CORRECT?

Accepted Answer

A) The petty cash custodian prepares a petty cash voucher to list the item purchased. 
B) The amount of cash on hand should equal $454. 
C) The amount of cash on hand and the paid petty cash voucher should be maintained in a cash box or other secure device. 
D) All of the statements are correct. 
A) The petty cash custodian prepares a petty cash voucher to list the item purchased. 
B) The amount of cash on hand should equal $454. 
C) The amount of cash on hand and the paid petty cash voucher should be maintained in a cash box or other secure device. 
D) All of the statements are correct.

Question 19

When preparing the bank reconciliation,if the adjusted book balance and the adjusted bank balance disagree,this may indicate:

Accepted Answer

A) a math error made in preparing the bank reconciliation. 
B) a book error went undetected. 
C) fraudulent financial reporting. 
D) A and B. 
A) a math error made in preparing the bank reconciliation. 
B) a book error went undetected. 
C) fraudulent financial reporting. 
D) A and B.

Question 20

A receiving report:

Accepted Answer

A) identifies the need for merchandise and begins the purchasing process. 
B) identifies that the merchandise has been received and ends the purchasing process. 
C) is sent by the purchasing department to the customer who purchases the item. 
D) includes the invoice,receiving report,purchase order and purchase request. 
A) identifies the need for merchandise and begins the purchasing process. 
B) identifies that the merchandise has been received and ends the purchasing process. 
C) is sent by the purchasing department to the customer who purchases the item. 
D) includes the invoice,receiving report,purchase order and purchase request.

When a company receives customers' checks by mail:

The control environment does NOT include:

If a bookkeeper mistakenly records a disbursement as $69 instead of the correct amount of $96,the error should be shown on the bank reconciliation as a:

All of the following will appear on the bank statement EXCEPT for:

When customer checks are received in the mail,which employees are involved in processing the checks?

Fraudulent financial reporting is the only type of fraud that involves making false or misleading entries in the books of the company.

Which of the following items from the bank reconciliation require a journal entry?

Payments by EFT are an important internal control for all of the following reasons EXCEPT for:

A company has a policy that all checks over $5,000 need to have the signature of the owner in addition to the signature of the bookkeeper.This is an example of:

Internal control is a plan of organization and a system of procedures designed to prevent fraud.

Fraudulent financial reporting:

A fidelity bond is a(n):

The book side of a bank reconciliation includes:

Which of the following transactions requires a journal entry?

Enron Corporation committed fraudulent financial reporting by:

Because cash equivalents are less liquid than cash,they cannot be reported along with cash.

Hill Company established a petty cash fund of $500.The first transaction was the purchase of stamps for $46.Which of the following statements is CORRECT?

When preparing the bank reconciliation,if the adjusted book balance and the adjusted bank balance disagree,this may indicate:

A receiving report:

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Receivables and Revenue

Inventory Cost of Goods Sold

Plant Assets, natural Resources, Intangibles

Current and Contingent Liabilities

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Investments

Time Value of Money

Filters

Exam 4: Internal Control Cash

When a company receives customers' checks by mail:

The control environment does NOT include:

If a bookkeeper mistakenly records a disbursement as $69 instead of the correct amount of $96,the error should be shown on the bank reconciliation as a:

All of the following will appear on the bank statement EXCEPT for:

When customer checks are received in the mail,which employees are involved in processing the checks?

Fraudulent financial reporting is the only type of fraud that involves making false or misleading entries in the books of the company.

Which of the following items from the bank reconciliation require a journal entry?

Payments by EFT are an important internal control for all of the following reasons EXCEPT for:

A company has a policy that all checks over $5,000 need to have the signature of the owner in addition to the signature of the bookkeeper.This is an example of:

Internal control is a plan of organization and a system of procedures designed to prevent fraud.

Fraudulent financial reporting:

A fidelity bond is a(n):

The book side of a bank reconciliation includes:

Which of the following transactions requires a journal entry?

Enron Corporation committed fraudulent financial reporting by:

Because cash equivalents are less liquid than cash,they cannot be reported along with cash.

Hill Company established a petty cash fund of $500.The first transaction was the purchase of stamps for $46.Which of the following statements is CORRECT?

When preparing the bank reconciliation,if the adjusted book balance and the adjusted bank balance disagree,this may indicate:

A receiving report:

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Receivables and Revenue

Inventory Cost of Goods Sold

Plant Assets, natural Resources, Intangibles

Current and Contingent Liabilities

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Investments

Time Value of Money

Filters