Question 1

It is unlikely that a company would want to bond its employees who handle cash or inventory.

Accepted Answer

A) True 
 B)False

Question 2

It is usually a good business practice to maintain as large a balance in the Cash account as possible.

Accepted Answer

A) True 
 B)False

Question 3

A physical inventory is usually taken

Accepted Answer

A) in the middle of the fiscal year. 
B) at the peak of the busy season. 
C) at the end of the fiscal year. 
D) at December 31. 
A) in the middle of the fiscal year. 
B) at the peak of the busy season. 
C) at the end of the fiscal year. 
D) at December 31.

Question 4

Under an effective system of internal control,errors occur only as a result of fraud or dishonesty.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following documents is prepared by a company's accounting department?

Accepted Answer

A) Bank statement 
B) Receiving report 
C) Check authorization 
D) Invoice 
A) Bank statement 
B) Receiving report 
C) Check authorization 
D) Invoice

Question 6

One example of a periodic independent verification is the bank reconciliation.

Accepted Answer

A) True 
 B)False

Question 7

A $150 petty cash fund has cash of $64 and valid receipts for $75.The entry to replenish the fund would be:

Accepted Answer

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

Question 8

Privately owned companies

Accepted Answer

A) are required to have an independent CPA audit their financial statements. 
B) are required to have their internal control systems audited. 
C) are required to have both the financial statements and internal control systems audited. 
D) are not required to do any of these. 
A) are required to have an independent CPA audit their financial statements. 
B) are required to have their internal control systems audited. 
C) are required to have both the financial statements and internal control systems audited. 
D) are not required to do any of these.

Question 9

Explain management's responsibility as it pertains to internal control of a company.

Accepted Answer

Management is responsible for establishi

Question 10

Which of the following attributes of internal control would be violated if the purchasing department wrote checks to pay accounts payable?

Accepted Answer

A) Adequate design of documents 
B) Sound personnel procedures 
C) Periodic independent verification 
D) Separation of duties 
A) Adequate design of documents 
B) Sound personnel procedures 
C) Periodic independent verification 
D) Separation of duties

Question 11

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 reimbursement of the petty cash fund would include a

Accepted Answer

A) credit to Postage Expense for $20. 
B) debit to Petty Cash for $90. 
C) credit to Cash for $85. 
D) debit to cash for $5. 
A) credit to Postage Expense for $20. 
B) debit to Petty Cash for $90. 
C) credit to Cash for $85. 
D) debit to cash for $5.

Question 12

Which of the following documents would not originate with the purchasing company?

Accepted Answer

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

Question 13

Which of the following documents would be sent to the treasurer?

Accepted Answer

A) Purchase order 
B) Invoice 
C) Check authorization 
D) Bank statement 
A) Purchase order 
B) Invoice 
C) Check authorization 
D) Bank statement

Question 14

The use of a cash register is an example of a physical control.

Accepted Answer

A) True 
 B)False

Question 15

It is best that the receiving department not be given a copy of the purchase order or the invoice.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following would be added to the balance per bank?

Accepted Answer

A) Outstanding checks 
B) Bank service charges 
C) Collection of a note receivable by the bank 
D) Deposits in transit 
A) Outstanding checks 
B) Bank service charges 
C) Collection of a note receivable by the bank 
D) Deposits in transit

Question 17

The document prepared by a department requesting the company to buy something is called a(n)

Accepted Answer

A) purchase order. 
B) invoice. 
C) receiving report. 
D) purchase requisition. 
A) purchase order. 
B) invoice. 
C) receiving report. 
D) purchase requisition.

Question 18

A remittance advice is attached to a(n)

Accepted Answer

A) receiving report. 
B) check. 
C) purchase order. 
D) invoice. 
A) receiving report. 
B) check. 
C) purchase order. 
D) invoice.

Question 19

Bonding means insuring a company against loss due to employee theft.

Accepted Answer

A) True 
 B)False

Question 20

Annual reports of public companies will include statements from both management and independent auditors regarding the adequacy of internal control.

Accepted Answer

A) True 
 B)False

Exam 7: Cash and Internal Control

It is unlikely that a company would want to bond its employees who handle cash or inventory.

It is usually a good business practice to maintain as large a balance in the Cash account as possible.

A physical inventory is usually taken

Under an effective system of internal control,errors occur only as a result of fraud or dishonesty.

Which of the following documents is prepared by a company's accounting department?

One example of a periodic independent verification is the bank reconciliation.

A $150 petty cash fund has cash of $64 and valid receipts for $75.The entry to replenish the fund would be:

Privately owned companies

Explain management's responsibility as it pertains to internal control of a company.

Which of the following attributes of internal control would be violated if the purchasing department wrote checks to pay accounts payable?

Which of the following documents would not originate with the purchasing company?

Which of the following documents would be sent to the treasurer?

The use of a cash register is an example of a physical control.

It is best that the receiving department not be given a copy of the purchase order or the invoice.

Which of the following would be added to the balance per bank?

The document prepared by a department requesting the company to buy something is called a(n)

A remittance advice is attached to a(n)

Bonding means insuring a company against loss due to employee theft.

Annual reports of public companies will include statements from both management and independent auditors regarding the adequacy of internal control.

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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