Question 1

One of the objectives of internal control is to:

Accepted Answer

A)  control the internal organization of the accounting department personnel and equipment. 
B)  provide reasonable assurance that assets are safeguarded. 
C)  prevent fraud and promote the social interest of the company. 
D)  provide control over "internal-use only" reports and employee internal conduct. 
A)  control the internal organization of the accounting department personnel and equipment. 
B)  provide reasonable assurance that assets are safeguarded. 
C)  prevent fraud and promote the social interest of the company. 
D)  provide control over "internal-use only" reports and employee internal conduct.

Question 2

List the objectives of internal control and give an example of how each is implemented.
The objectives of internal control are to provide reasonable assurance that:
 (1)Assets are safeguarded and used for business puposes.
(2)Business information is accurate.
(3)Employees comply with laws and regulations.

Accepted Answer

Examples are:
 (1)Duties are s

Question 3

What is a special-purpose cash fund? What is its purpose? Give two examples.

Accepted Answer

A special-purpose cash fund is

Question 4

There are only two internal control objectives: to ensure accurate financial reports, and to ensure compliance with applicable laws.

Accepted Answer

A) True 
 B)False

Question 5

All bank memorandums reported on the bank reconciliation require entries in the depositor's accounts.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

The Sarbanes-Oxley Act requires companies and their independent accountants to report on the effectiveness of the company's internal controls.

Accepted Answer

A) True 
 B)False

Question 8

Employee fraud is the intentional act of deceiving an employer for personal gain.

Accepted Answer

A) True 
 B)False

Question 9

The amount of deposits in transit is included on the bank statement as a(n):

Accepted Answer

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

Question 10

The bank reconciliation:

Accepted Answer

A)  should be prepared by an employee who records cash transactions. 
B)  is part of the internal control system. 
C)  is for information purposes only. 
D)  is sent to the bank for verification. 
A)  should be prepared by an employee who records cash transactions. 
B)  is part of the internal control system. 
C)  is for information purposes only. 
D)  is sent to the bank for verification.

Question 11

Depositing all cash, checks, etc. in a bank and paying with checks is an internal control procedure over cash.

Accepted Answer

A) True 
 B)False

Question 12

Using the following information, list the items that will require adjustments to the accounts of Salem Co. Also, indicate which accounts will increase or decrease due to the adjustment.
 (a)The bank statement balance is $ \$ 2,597 $.
(b)The cash ac count balance is $ \$ 2,680 $.
(c)Outstanding checks amounted to $ \$ 703 $.
(d)Deposits in transit are $ \$ 732 $.
(e)The bank service charge is $ \$ 25 $.
(f)Interest added to the che cling account by the bank is $ \$ 7 $.
(g)A check drawn for $ \$ 59 $ was incorrectly charged by the bank as $ \$ 95 $.

Accepted Answer

(e)Service charge @#LAT-DLM&; Cash will

Question 13

For each of the following procedures, indicate whether it is an internal control strength or a weakness. Also, for each weakness, explain why it is a weakness and how it can be corrected.
 (a)Only the best ac counting graduates are hired to eliminate the need for training.
(b)The person responsible for or dering and receiving supplie s is not pemitted to rec ord or pay for the supplies.
(c)Company policy mandates that all employees take vacation time.
(d)Internal auditors constantly monitor the internal control system.
(e)The accountant deposits cash at least once each day to prevent holding large amounts of cash on hand.

Accepted Answer

(a)Wealness. All new hiresneed to be tra

Question 14

Cash equivalents include:

Accepted Answer

A)  checks. 
B)  coins and currency. 
C)  money market funds and commercial paper. 
D)  stocks and short-term bonds. 
A)  checks. 
B)  coins and currency. 
C)  money market funds and commercial paper. 
D)  stocks and short-term bonds.

Question 15

In a computerized system, paid vouchers are transferred to a paid voucher file.

Accepted Answer

A) True 
 B)False

Question 16

A check drawn by a depositor for $915 in payment of a liability was recorded in the depositor's book as $195. What adjustment is required in the depositor's accounts?

Accepted Answer

A)  Decrease Accounts Payable; decrease Cash 
B)  Increase Cash; decrease Accounts Receivable 
C)  Increase Cash; increase Accounts Payable 
D)  Increase Accounts Receivable; decrease Cash 
A)  Decrease Accounts Payable; decrease Cash 
B)  Increase Cash; decrease Accounts Receivable 
C)  Increase Cash; increase Accounts Payable 
D)  Increase Accounts Receivable; decrease Cash

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Which of the following would be deducted from 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

Question 19

Describe the features of a voucher system and list typical supporting documents for a voucher.

Accepted Answer

A voucher system is used to control cash

Question 20

List the advantages of Electronic Funds Transfers.

Accepted Answer

Advantage:
(1) EFTs cost less than recei

One of the objectives of internal control is to:

What is a special-purpose cash fund? What is its purpose? Give two examples.

There are only two internal control objectives: to ensure accurate financial reports, and to ensure compliance with applicable laws.

All bank memorandums reported on the bank reconciliation require entries in the depositor's accounts.

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

The Sarbanes-Oxley Act requires companies and their independent accountants to report on the effectiveness of the company's internal controls.

Employee fraud is the intentional act of deceiving an employer for personal gain.

The amount of deposits in transit is included on the bank statement as a(n):

The bank reconciliation:

Depositing all cash, checks, etc. in a bank and paying with checks is an internal control procedure over cash.

Cash equivalents include:

In a computerized system, paid vouchers are transferred to a paid voucher file.

A check drawn by a depositor for $915 in payment of a liability was recorded in the depositor's book as $195. What adjustment is required in the depositor's accounts?

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

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

Describe the features of a voucher system and list typical supporting documents for a voucher.

List the advantages of Electronic Funds Transfers.

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

One of the objectives of internal control is to:

What is a special-purpose cash fund? What is its purpose? Give two examples.

There are only two internal control objectives: to ensure accurate financial reports, and to ensure compliance with applicable laws.

All bank memorandums reported on the bank reconciliation require entries in the depositor's accounts.

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

The Sarbanes-Oxley Act requires companies and their independent accountants to report on the effectiveness of the company's internal controls.

Employee fraud is the intentional act of deceiving an employer for personal gain.

The amount of deposits in transit is included on the bank statement as a(n):

The bank reconciliation:

Depositing all cash, checks, etc. in a bank and paying with checks is an internal control procedure over cash.

Cash equivalents include:

In a computerized system, paid vouchers are transferred to a paid voucher file.

A check drawn by a depositor for $915 in payment of a liability was recorded in the depositor's book as $195. What adjustment is required in the depositor's accounts?

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

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

Describe the features of a voucher system and list typical supporting documents for a voucher.

List the advantages of Electronic Funds Transfers.

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