Question 1

Damaged goods that can be sold at a reduced price should be included in a company's merchandise inventory.

Accepted Answer

A) True 
 B)False

Question 2

The bonding of employees is an example of which feature of a good system of internal control?

Accepted Answer

A) Authorization of transactions 
B) Sound personnel policies 
C) Separation of duties 
D) Limited access to assets 
A) Authorization of transactions 
B) Sound personnel policies 
C) Separation of duties 
D) Limited access to assets

Question 3

Invoices are documents prepared by a vendor and sent to the accounting department of its customers.

Accepted Answer

A) True 
 B)False

Question 4

The Sarbanes-Oxley Act has succeeded in

Accepted Answer

A) heightening awareness and diligence with respect to internal control. 
B) increasing transparency in privately owned companies. 
C) stopping fraud from occurring. 
D) all of these. 
A) heightening awareness and diligence with respect to internal control. 
B) increasing transparency in privately owned companies. 
C) stopping fraud from occurring. 
D) all of these.

Question 5

The amount in the petty cash fund plus the sum of the petty cash vouchers should at all times equal the amount shown in the Petty Cash account.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following documents would be prepared (by a buyer of goods)after the others?

Accepted Answer

A) Purchase order 
B) Check 
C) Purchase requisition 
D) Receiving report 
A) Purchase order 
B) Check 
C) Purchase requisition 
D) Receiving report

Question 7

The Sarbanes-Oxley Act of 2002 does not apply to

Accepted Answer

A) public companies with assets over $300 million. 
B) public companies with assets under $1 million. 
C) privately owned companies. 
D) companies established after 2002. 
A) public companies with assets over $300 million. 
B) public companies with assets under $1 million. 
C) privately owned companies. 
D) companies established after 2002.

Question 8

A formal request for a purchase from a requesting department of a business is known as a purchase order.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following would be deducted from the balance per books on a bank reconciliation?

Accepted Answer

A) Notes collected by the bank 
B) Deposits in transit 
C) Service charges 
D) Outstanding checks 
A) Notes collected by the bank 
B) Deposits in transit 
C) Service charges 
D) Outstanding checks

Question 10

A purchase requisition is a document sent by a company to a vendor.

Accepted Answer

A) True 
 B)False

Question 11

On a bank reconciliation,$75 interest earned on a checking account would

Accepted Answer

A) appear as a deduction of $75 from the balance per books. 
B) appear as an addition of $75 to the balance per bank. 
C) appear as an addition of $75 to the balance per books. 
D) not appear as an adjustment on the bank reconciliation 
A) appear as a deduction of $75 from the balance per books. 
B) appear as an addition of $75 to the balance per bank. 
C) appear as an addition of $75 to the balance per books. 
D) not appear as an adjustment on the bank reconciliation

Question 12

A company establishes a $200 petty cash fund.The fund is replenished in the amount of $180,after petty cash vouchers of $80 for postage,$68 for donations,and $54 for meals had accumulated.Was there a cash shortage,overage,or neither? (State amount if overage or shortage. )

Accepted Answer

$22 overag

Question 13

The Sarbanes-Oxley Act of 2002 does not require any certification from a public company's chief executive officer about the company's system of internal control.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not a goal of a system of internal control over merchandising transactions?

Accepted Answer

A) Keep credit losses as low as possible. 
B) Prevent the theft of cash and inventory. 
C) Keep the maximum amount of inventory on hand at all times. 
D) Keep enough cash on hand to take advantage of purchase discounts. 
A) Keep credit losses as low as possible. 
B) Prevent the theft of cash and inventory. 
C) Keep the maximum amount of inventory on hand at all times. 
D) Keep enough cash on hand to take advantage of purchase discounts.

Question 15

Which of the following is an appropriate internal control activity for cash?

Accepted Answer

A) Recordkeeping and custodianship over cash should be performed by the same person. 
B) The amount of cash on hand should be kept to a minimum. 
C) Banking facilities should be used as little as possible. 
D) All payments should be made with currency,not checks. 
A) Recordkeeping and custodianship over cash should be performed by the same person. 
B) The amount of cash on hand should be kept to a minimum. 
C) Banking facilities should be used as little as possible. 
D) All payments should be made with currency,not checks.

Question 16

An effective system of internal control requires that individuals take periodic vacations.

Accepted Answer

A) True 
 B)False

Question 17

The use of electronic funds transfers makes check writing unnecessary.

Accepted Answer

A) True 
 B)False

Question 18

Bonding provides a guarantee against theft.

Accepted Answer

A) True 
 B)False

Question 19

Using bar codes to take a physical inventory is considered poor accounting practice.

Accepted Answer

A) True 
 B)False

Question 20

A company establishes a $150 petty cash fund.The fund is replenished in the amount of $136,after petty cash vouchers of $66 for transportation,$44 for supplies,and $22 for postage had accumulated.Was there a cash shortage,overage,or neither? (State amount if overage or shortage. )

Accepted Answer

$4 shortag

Exam 7: Cash and Internal Control

Damaged goods that can be sold at a reduced price should be included in a company's merchandise inventory.

The bonding of employees is an example of which feature of a good system of internal control?

Invoices are documents prepared by a vendor and sent to the accounting department of its customers.

The Sarbanes-Oxley Act has succeeded in

The amount in the petty cash fund plus the sum of the petty cash vouchers should at all times equal the amount shown in the Petty Cash account.

Which of the following documents would be prepared (by a buyer of goods)after the others?

The Sarbanes-Oxley Act of 2002 does not apply to

A formal request for a purchase from a requesting department of a business is known as a purchase order.

Which of the following would be deducted from the balance per books on a bank reconciliation?

A purchase requisition is a document sent by a company to a vendor.

On a bank reconciliation,$75 interest earned on a checking account would

A company establishes a $200 petty cash fund.The fund is replenished in the amount of $180,after petty cash vouchers of $80 for postage,$68 for donations,and $54 for meals had accumulated.Was there a cash shortage,overage,or neither? (State amount if overage or shortage. )

The Sarbanes-Oxley Act of 2002 does not require any certification from a public company's chief executive officer about the company's system of internal control.

Which of the following is not a goal of a system of internal control over merchandising transactions?

Which of the following is an appropriate internal control activity for cash?

An effective system of internal control requires that individuals take periodic vacations.

The use of electronic funds transfers makes check writing unnecessary.

Bonding provides a guarantee against theft.

Using bar codes to take a physical inventory is considered poor accounting practice.

A company establishes a $150 petty cash fund.The fund is replenished in the amount of $136,after petty cash vouchers of $66 for transportation,$44 for supplies,and $22 for postage had accumulated.Was there a cash shortage,overage,or neither? (State amount if overage or shortage. )

Uses of Accounting Information and the Financial Statements

Measurement Concepts: Recording Business Transactions

Measuring Business Income: Adjusting the Accounts

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Receivables

Long-Term Assets

Current Liabilities and Fair Value Accounting

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems: Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, including Target Costing and Transfer Pricing

Quality Management and Measurement

Accounting for Unincorporated Businesses

Accounting for Investments

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