Question 1

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

Accepted Answer

Management is responsible for establishi

Question 2

A result of a separation of duties is that

Accepted Answer

A) operations become extremely inefficient because of constant training of employees. 
B) more employees will need to be bonded. 
C) theft by employees becomes impossible. 
D) theft is possible only if several employees scheme together 
A) operations become extremely inefficient because of constant training of employees. 
B) more employees will need to be bonded. 
C) theft by employees becomes impossible. 
D) theft is possible only if several employees scheme together

Question 3

Under a perpetual inventory system,is it necessary to take a physical inventory at the end of the period? Why or why not?

Accepted Answer

A physical inventory must be taken to de

Question 4

The use of prenumbered documents is important to a good system of internal control.

Accepted Answer

A) True 
 B)False

Question 5

Bonding provides a guarantee against theft.

Accepted Answer

A) True 
 B)False

Question 6

In the financial statements,the balance of the Petty Cash account and the balance of the Cash account are shown separately.

Accepted Answer

A) True 
 B)False

Question 7

A check authorization is a document that permits the issuance of a check to pay an invoice.

Accepted Answer

A) True 
 B)False

Question 8

The use of a cash register would be an example of a physical control.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following bank reconciliation items would not result in a journal entry?

Accepted Answer

A) Service charge 
B) NSF check of a customer 
C) Collection of a note by the bank 
D) Deposits in transit 
A) Service charge 
B) NSF check of a customer 
C) Collection of a note by the bank 
D) Deposits in transit

Question 10

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 11

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 12

Cash and inventory are very vulnerable to theft.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Compute the correct amount for each letter in the following table:

Accepted Answer

(a)$8,700 ($6,900 - $1,200 + $

Question 15

The treasurer should prepare and sign a check only after a proper check authorization has been provided.

Accepted Answer

A) True 
 B)False

Question 16

The Report of Management in Brighton Company's annual report states,"Management has established a system of internal controls to provide reasonable assurance that assets are maintained and accounted for in accordance with its policies and that transactions are recorded accurately on the company's books and records." Name five control activities Townsgate could and probably does implement.

Accepted Answer

Any of the following control activities

Question 17

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 18

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 19

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 20

Merchandising companies do not need as good a system of internal control as service companies.

Accepted Answer

A) True 
 B)False

Exam 8: Cash and Internal Control

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

A result of a separation of duties is that

Under a perpetual inventory system,is it necessary to take a physical inventory at the end of the period? Why or why not?

The use of prenumbered documents is important to a good system of internal control.

Bonding provides a guarantee against theft.

In the financial statements,the balance of the Petty Cash account and the balance of the Cash account are shown separately.

A check authorization is a document that permits the issuance of a check to pay an invoice.

The use of a cash register would be an example of a physical control.

Which of the following bank reconciliation items would not result in a journal entry?

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

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

Cash and inventory are very vulnerable to theft.

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

Compute the correct amount for each letter in the following table:

The treasurer should prepare and sign a check only after a proper check authorization has been provided.

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

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 documents would be sent to the treasurer?

Merchandising companies do not need as good a system of internal control as service companies.

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

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 and Capital Budgeting

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