Question 1

When a firm uses internal auditors, it is adhering to which of the following internal control elements?

Accepted Answer

A)  Risk assessment 
B)  Control procedures 
C)  Monitoring 
D)  Information and communication 
A)  Risk assessment 
B)  Control procedures 
C)  Monitoring 
D)  Information and communication C

Question 2

Internal control does not consist of policies and procedures that:

Accepted Answer

A)  guarantee the company will not go bankrupt. 
B)  ensure that laws and regulations are being followed. 
C)  protect assets from misuse. 
D)  ensure that business information is accurate. 
A)  guarantee the company will not go bankrupt. 
B)  ensure that laws and regulations are being followed. 
C)  protect assets from misuse. 
D)  ensure that business information is accurate. A

Question 3

Which of the following would be added to the cash balance per books on a bank reconciliation?

Accepted Answer

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

Question 4

A check drawn by a depositor for $810 in payment of a liability was recorded by the depositor as $180. The $630 difference would be included on the bank reconciliation as a(n):

Accepted Answer

A)  addition to the cash balance per books. 
B)  addition to the cash balance per bank. 
C)  deduction from the cash balance per bank. 
D)  deduction from the cash balance per books. 
A)  addition to the cash balance per books. 
B)  addition to the cash balance per bank. 
C)  deduction from the cash balance per bank. 
D)  deduction from the cash balance per books.

Question 5

Which of the following should not be considered cash by an accountant?

Accepted Answer

A)  Money orders 
B)  Bank checking accounts 
C)  Postage stamps 
D)  Travelers' checks 
A)  Money orders 
B)  Bank checking accounts 
C)  Postage stamps 
D)  Travelers' checks

Question 6

What is the purpose of the Sarbanes-Oxley Act of 2002, and why was it enacted?

Accepted Answer

The Sarbanes-Oxley Act of 2002 was passe

Question 7

In preparing a bank reconciliation, the amount of deposits in transit is deducted from the cash balance per books.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not considered as cash?

Accepted Answer

A)  Commercial paper 
B)  Checks 
C)  Money orders 
D)  Coins 
A)  Commercial paper 
B)  Checks 
C)  Money orders 
D)  Coins

Question 9

Money market funds, commercial paper, and U.S. Treasury Bills are examples of cash equivalents.

Accepted Answer

A) True 
 B)False

Question 10

A voucher system is an example of an internal control procedure over cash receipts.

Accepted Answer

A) True 
 B)False

Question 11

Management's philosophy and operating style would affect which of the following elements of internal control?

Accepted Answer

A)  Risk assessment 
B)  Monitoring 
C)  Control environment 
D)  Information and communication 
A)  Risk assessment 
B)  Monitoring 
C)  Control environment 
D)  Information and communication

Question 12

A remittance advice is the notification accompanying the check issued to a creditor that states the specific invoice being paid.

Accepted Answer

A) True 
 B)False

Question 13

All organizations face risks, and the assessment of these risks is necessary so that the objectives of internal control can be achieved.

Accepted Answer

A) True 
 B)False

Question 14

The bank statement for Marley Co. indicates a balance of $10,000.50 on June 30, 2013. The cash account for the company had a balance of $4,677.10. Prepare a bank reconciliation on the basis of the following reconciling items:
 (a)Cash sales of $ \$ 342 $ had been erroneously recorded as $ \$ 324 $.
(b)Deposits in transit not reconded by bank, $ \$ 700 $.
(c)Bank debit memorandun for service charges, $ \$ 30 $.
(d)Bank credit memorandum for note collected by bank, $ \$ 2,050 $, including $ \$ 50 $ interest.
(e)Bank debit memoranchum for $ \$ 207.40 $ NSF (not sufficient funds) check from Alice Martin, a customer.
(f)Checks outst anding $ \$ 4,192.80 $.

Accepted Answer

The answer of The bank statement for Marley Co. indicates...

Question 15

In preparing a bank reconciliation, the amount of outstanding checks is added to the cash balance per books.

Accepted Answer

A) True 
 B)False

Question 16

A voucher is a form where pertinent data about a liability and the particulars of its payment are recorded.

Accepted Answer

A) True 
 B)False

Question 17

A check for $456 was erroneously charged by the bank as $654. In order for the bank reconciliation to balance, you must subtract $198 from the bank statement balance.

Accepted Answer

A) True 
 B)False

Question 18

Receipts from cash sales of $7,500 were recorded incorrectly by the depositor as $5,700. What adjustment is required in the bank's accounts?

Accepted Answer

A)  Decrease Sales; decrease Cash 
B)  Increase Cash; decrease Accounts Receivable 
C)  Increase Cash; increase Sales 
D)  No adjustment needed 
A)  Decrease Sales; decrease Cash 
B)  Increase Cash; decrease Accounts Receivable 
C)  Increase Cash; increase Sales 
D)  No adjustment needed

Question 19

Requiring employees to take annual vacations is part of which element of internal control?

Accepted Answer

A)  Control environment 
B)  Risk assessment 
C)  Control procedures 
D)  Monitoring 
A)  Control environment 
B)  Risk assessment 
C)  Control procedures 
D)  Monitoring

Question 20

In preparing a bank reconciliation, the amount indicated by a debit memorandum for bank service charges is added to the cash balance per books.

Accepted Answer

A) True 
 B)False

When a firm uses internal auditors, it is adhering to which of the following internal control elements?

Internal control does not consist of policies and procedures that:

Which of the following would be added to the cash balance per books on a bank reconciliation?

A check drawn by a depositor for $810 in payment of a liability was recorded by the depositor as $180. The $630 difference would be included on the bank reconciliation as a(n):

Which of the following should not be considered cash by an accountant?

What is the purpose of the Sarbanes-Oxley Act of 2002, and why was it enacted?

In preparing a bank reconciliation, the amount of deposits in transit is deducted from the cash balance per books.

Which of the following is not considered as cash?

Money market funds, commercial paper, and U.S. Treasury Bills are examples of cash equivalents.

A voucher system is an example of an internal control procedure over cash receipts.

Management's philosophy and operating style would affect which of the following elements of internal control?

A remittance advice is the notification accompanying the check issued to a creditor that states the specific invoice being paid.

All organizations face risks, and the assessment of these risks is necessary so that the objectives of internal control can be achieved.

In preparing a bank reconciliation, the amount of outstanding checks is added to the cash balance per books.

A voucher is a form where pertinent data about a liability and the particulars of its payment are recorded.

A check for $456 was erroneously charged by the bank as $654. In order for the bank reconciliation to balance, you must subtract $198 from the bank statement balance.

Receipts from cash sales of $7,500 were recorded incorrectly by the depositor as $5,700. What adjustment is required in the bank's accounts?

Requiring employees to take annual vacations is part of which element of internal control?

In preparing a bank reconciliation, the amount indicated by a debit memorandum for bank service charges is added to the cash balance per books.

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

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Exam 5: Sarbanes-Oxley, Internal Control, and Cash

When a firm uses internal auditors, it is adhering to which of the following internal control elements?

Internal control does not consist of policies and procedures that:

Which of the following would be added to the cash balance per books on a bank reconciliation?

A check drawn by a depositor for $810 in payment of a liability was recorded by the depositor as $180. The $630 difference would be included on the bank reconciliation as a(n):

Which of the following should not be considered cash by an accountant?

What is the purpose of the Sarbanes-Oxley Act of 2002, and why was it enacted?

In preparing a bank reconciliation, the amount of deposits in transit is deducted from the cash balance per books.

Which of the following is not considered as cash?

Money market funds, commercial paper, and U.S. Treasury Bills are examples of cash equivalents.

A voucher system is an example of an internal control procedure over cash receipts.

Management's philosophy and operating style would affect which of the following elements of internal control?

A remittance advice is the notification accompanying the check issued to a creditor that states the specific invoice being paid.

All organizations face risks, and the assessment of these risks is necessary so that the objectives of internal control can be achieved.

In preparing a bank reconciliation, the amount of outstanding checks is added to the cash balance per books.

A voucher is a form where pertinent data about a liability and the particulars of its payment are recorded.

A check for $456 was erroneously charged by the bank as $654. In order for the bank reconciliation to balance, you must subtract $198 from the bank statement balance.

Receipts from cash sales of $7,500 were recorded incorrectly by the depositor as $5,700. What adjustment is required in the bank's accounts?

Requiring employees to take annual vacations is part of which element of internal control?

In preparing a bank reconciliation, the amount indicated by a debit memorandum for bank service charges is added to the cash balance per books.

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters