Question 1

The management of public companies must establish systems that

Accepted Answer

A) safeguard the firm's assets. 
B) ensure reliability of its accounting records. 
C) see that employees comply with legal requirements 
D) do all of these. 
A) safeguard the firm's assets. 
B) ensure reliability of its accounting records. 
C) see that employees comply with legal requirements 
D) do all of these.

Question 2

Taking a physical inventory is not necessary under a perpetual inventory system.

Accepted Answer

A) True 
 B)False

Question 3

Cash equivalents are usually listed as short-term investments on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 4

A good system of internal control is designed to achieve all of the following except

Accepted Answer

A) efficiency of operations. 
B) reliability of financial reporting. 
C) compliance with relevant laws and regulations. 
D) attainment of target sales. 
A) efficiency of operations. 
B) reliability of financial reporting. 
C) compliance with relevant laws and regulations. 
D) attainment of target sales.

Question 5

A company's merchandise inventory includes all of the following,except

Accepted Answer

A) goods in possession,but which cannot be sold. 
B) goods on shelves. 
C) damaged goods that can be sold at a reduced price. 
D) goods in storerooms. 
A) goods in possession,but which cannot be sold. 
B) goods on shelves. 
C) damaged goods that can be sold at a reduced price. 
D) goods in storerooms.

Question 6

To assure an efficient system of internal control,management should authorize all transactions.

Accepted Answer

A) True 
 B)False

Question 7

A purchase requisition is prepared after a purchase order.

Accepted Answer

A) True 
 B)False

Question 8

An accountant is responsible for the following activities: 
(1)receiving all cash; (2)maintaining the general ledger; (3)maintaining the accounts receivable subsidiary ledger that includes the individual records of each customer; (4)maintaining the journals for recording sales,purchases,and cash receipts;and (5)preparing monthly statements to be sent to customers.As a service to customers and employees,the company allows the accountant to cash checks of up to $75 with money from the cash receipts.When deposits are made,the checks are included in place of the cash receipts.What weaknesses in internal control exist in this system?

Accepted Answer

In this case,the principle of separation

Question 9

Which of the following would not be found in a good system of internal control?

Accepted Answer

A) Requiring all employees to take earned vacations 
B) Establishing a system of checks and balances 
C) Having one person handle all the responsibilities of a department 
D) Establishing an internal audit staff 
A) Requiring all employees to take earned vacations 
B) Establishing a system of checks and balances 
C) Having one person handle all the responsibilities of a department 
D) Establishing an internal audit staff

Question 10

The materiality concept dictates that no internal controls be established over petty cash.

Accepted Answer

A) True 
 B)False

Question 11

A $200 petty cash fund has cash of $20 and valid receipts of $164.The entry to replenish the fund would be:

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Question 12

When a petty cash fund is established,the entry contains a credit to Cash.

Accepted Answer

A) True 
 B)False

Question 13

The Sarbanes-Oxley Act of 2002 requires all of the following to certify a public company's system of internal control,except for the

Accepted Answer

A) chief financial officer. 
B) the independent auditors. 
C) the board of directors. 
D) chief executive officer. 
A) chief financial officer. 
B) the independent auditors. 
C) the board of directors. 
D) chief executive officer.

Question 14

Which of the following is not an internal control activity for cash?

Accepted Answer

A) Unannounced audits of cash on hand should be made occasionally. 
B) The number of persons who have access to cash should be limited. 
C) The functions of recordkeeping and keeping custody of cash should be combined. 
D) All cash receipts should be recorded promptly. 
A) Unannounced audits of cash on hand should be made occasionally. 
B) The number of persons who have access to cash should be limited. 
C) The functions of recordkeeping and keeping custody of cash should be combined. 
D) All cash receipts should be recorded promptly.

Question 15

Which of the following is not an internal control activity for cash?

Accepted Answer

A) The amount of cash on hand should be kept to a minimum. 
B) Banking facilities should be used as much as possible. 
C) Employees who have access to cash should be bonded. 
D) All payments should be made with currency,not checks. 
A) The amount of cash on hand should be kept to a minimum. 
B) Banking facilities should be used as much as possible. 
C) Employees who have access to cash should be bonded. 
D) All payments should be made with currency,not checks.

Question 16

Use the following information regarding Larson Company to answer the question below. 
1)Established a petty cash fund in the amount of $250.
2)Reimbursed the petty cash fund given the following petty cash fund disbursements:
A.Payment for postage,$20.
B.Payment for supplies,$70.
3)Increased the petty cash fund to $300.
4)Cash over at the end of the first period was $5.
-The entry to record the increase in the Petty Cash account would include a

Accepted Answer

A) debit to the Petty Cash account for $50. 
B) credit to the Petty Cash account for $50. 
C) memorandum entry only in the ledger. 
D) debit to the Cash account for $50. 
A) debit to the Petty Cash account for $50. 
B) credit to the Petty Cash account for $50. 
C) memorandum entry only in the ledger. 
D) debit to the Cash account for $50.

Question 17

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

Accepted Answer

A) Sound personnel procedures 
B) Periodic independent verification 
C) Limited access to assets 
D) Separation of duties 
A) Sound personnel procedures 
B) Periodic independent verification 
C) Limited access to assets 
D) Separation of duties

Question 18

The petty cash fund should be replenished

Accepted Answer

A) only for the total amount of expense receipts on hand. 
B) for the total amount that was originally set up in the imprest fund. 
C) for the total amount of expense receipts on hand plus cash remaining before replenishment. 
D) for the amount needed to bring the petty cash fund back to its imprest amount. 
A) only for the total amount of expense receipts on hand. 
B) for the total amount that was originally set up in the imprest fund. 
C) for the total amount of expense receipts on hand plus cash remaining before replenishment. 
D) for the amount needed to bring the petty cash fund back to its imprest amount.

Question 19

Good internal control dictates that one employee should oversee all related parts of a transaction.

Accepted Answer

A) True 
 B)False

Question 20

Public companies are required to

Accepted Answer

A) have an independent audit of financial statements. 
B) have an audit of the internal control systems. 
C) fully document and certify the company's system of internal controls. 
D) do all of these. 
A) have an independent audit of financial statements. 
B) have an audit of the internal control systems. 
C) fully document and certify the company's system of internal controls. 
D) do all of these.

Exam 7: Cash and Internal Control

The management of public companies must establish systems that

Taking a physical inventory is not necessary under a perpetual inventory system.

Cash equivalents are usually listed as short-term investments on the balance sheet.

A good system of internal control is designed to achieve all of the following except

A company's merchandise inventory includes all of the following,except

To assure an efficient system of internal control,management should authorize all transactions.

A purchase requisition is prepared after a purchase order.

Which of the following would not be found in a good system of internal control?

The materiality concept dictates that no internal controls be established over petty cash.

A $200 petty cash fund has cash of $20 and valid receipts of $164.The entry to replenish the fund would be:

When a petty cash fund is established,the entry contains a credit to Cash.

The Sarbanes-Oxley Act of 2002 requires all of the following to certify a public company's system of internal control,except for the

Which of the following is not an internal control activity for cash?

Which of the following is not an internal control activity for cash?

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

The petty cash fund should be replenished

Good internal control dictates that one employee should oversee all related parts of a transaction.

Public companies are required to

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

Filters