Question 1

A debit memorandum from the bank indicates that the bank has deducted an amount from the depositor's account.

Accepted Answer

A) True 
 B)False

Question 2

The depositor reconciles the bank's statement to the depositor's records.

Accepted Answer

A) True 
 B)False

Question 3

For efficiency of operations and better control over cash, a company should maintain only one bank account.

Accepted Answer

A) True 
 B)False

Question 4

The bank informs the depositor of bank service charges by including a debit memorandum with the monthly bank statement.

Accepted Answer

A) True 
 B)False

Question 5

In preparing a bank reconciliation, the amount of a canceled check omitted from the depositor's records is deducted from the cash balance per books.

Accepted Answer

A) True 
 B)False

Question 6

The framework that has become widely accepted as the standard by which companies design, analyze, and evaluate internal controls is the:

Accepted Answer

A)  Internal Control - Integrated Framework by the Committee of Sponsoring Organizations. 
B)  Internal Control - Integrated Framework by the Congress of Special Offerings. 
C)  Internal Control Localized Structure by the Committee of Sponsoring Organizations. 
D)  Internal Control Localized Structure by the Congress of Special Offerings. 
A)  Internal Control - Integrated Framework by the Committee of Sponsoring Organizations. 
B)  Internal Control - Integrated Framework by the Congress of Special Offerings. 
C)  Internal Control Localized Structure by the Committee of Sponsoring Organizations. 
D)  Internal Control Localized Structure by the Congress of Special Offerings.

Question 7

An element of internal control is:

Accepted Answer

A)  generally accepted accounting principles. 
B)  control procedures. 
C)  special-purpose fund. 
D)  electronic funds transfer. 
A)  generally accepted accounting principles. 
B)  control procedures. 
C)  special-purpose fund. 
D)  electronic funds transfer.

Question 8

The Sarbanes-Oxley Act of 2002 requires companies and their independent accountants to:

Accepted Answer

A)  report on the effectiveness of the company's internal controls. 
B)  report on any fraud and theft detected in the company. 
C)  report on the state of the economy and likelihood of fraud. 
D)  report on the financial activities of the company. 
A)  report on the effectiveness of the company's internal controls. 
B)  report on any fraud and theft detected in the company. 
C)  report on the state of the economy and likelihood of fraud. 
D)  report on the financial activities of the company.

Question 9

A firm's internal control environment is influenced by:

Accepted Answer

A)  management's operating style. 
B)  organizational structure. 
C)  personnel policies. 
D)  all of these. 
A)  management's operating style. 
B)  organizational structure. 
C)  personnel policies. 
D)  all of these.

Question 10

Which of the following elements of internal control focuses on locating weaknesses and improving control effectiveness?

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 11

Using the following information, prepare a bank reconciliation for Salem Co. for May 31, 2013.
 (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 ad ded to the che cking account by the bank is $ \$ 7 $.
(g)A check drawn for $ \$ 59 $ was incorrectly charged by the bank as $ \$ 95 $.

Accepted Answer

The answer of Using the following information, prepare a bank...

Question 12

(a) Where are cash equivalents disclosed in the financial statements? 
(b) List three examples of cash equivalents.

Accepted Answer

(a) Cash account on the balanc

Question 13

Adding a review of operations by an internal audit staff strengthens internal control.

Accepted Answer

A) True 
 B)False

Question 14

Accompanying the bank statement was a credit memorandum for a short-term note collected by the bank for the depositor. This item would be included on the bank reconciliation as a(n):

Accepted Answer

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

Question 15

List and define each of the five elements of internal control set forth by the Integrated Framework.

Accepted Answer

(1)Control Enviroument: The control envi

Question 16

The Sarbanes-Oxley Act of 2002 requires companies to maintain strong and effective internal controls over recording transactions and preparing financial statements.

Accepted Answer

A) True 
 B)False

Question 17

Separating the custody of assets from accounting for assets is a part of which element of internal control?

Accepted Answer

A)  Information and communication 
B)  Monitoring 
C)  Control environment 
D)  Control procedures 
A)  Information and communication 
B)  Monitoring 
C)  Control environment 
D)  Control procedures

Question 18

A credit memorandum received with a bank statement means the company's bank account has been increased.

Accepted Answer

A) True 
 B)False

Question 19

When the petty cash fund is replenished, the petty cash account is adjusted for the total of all expenditures made since the fund was last replenished.

Accepted Answer

A) True 
 B)False

Question 20

Bank customers are considered owners of the bank, so the bank shows their accounts as an asset on the bank's records.

Accepted Answer

A) True 
 B)False

A debit memorandum from the bank indicates that the bank has deducted an amount from the depositor's account.

The depositor reconciles the bank's statement to the depositor's records.

For efficiency of operations and better control over cash, a company should maintain only one bank account.

The bank informs the depositor of bank service charges by including a debit memorandum with the monthly bank statement.

In preparing a bank reconciliation, the amount of a canceled check omitted from the depositor's records is deducted from the cash balance per books.

The framework that has become widely accepted as the standard by which companies design, analyze, and evaluate internal controls is the:

An element of internal control is:

The Sarbanes-Oxley Act of 2002 requires companies and their independent accountants to:

A firm's internal control environment is influenced by:

Which of the following elements of internal control focuses on locating weaknesses and improving control effectiveness?

(a) Where are cash equivalents disclosed in the financial statements? (b) List three examples of cash equivalents.

Adding a review of operations by an internal audit staff strengthens internal control.

Accompanying the bank statement was a credit memorandum for a short-term note collected by the bank for the depositor. This item would be included on the bank reconciliation as a(n):

List and define each of the five elements of internal control set forth by the Integrated Framework.

The Sarbanes-Oxley Act of 2002 requires companies to maintain strong and effective internal controls over recording transactions and preparing financial statements.

Separating the custody of assets from accounting for assets is a part of which element of internal control?

A credit memorandum received with a bank statement means the company's bank account has been increased.

When the petty cash fund is replenished, the petty cash account is adjusted for the total of all expenditures made since the fund was last replenished.

Bank customers are considered owners of the bank, so the bank shows their accounts as an asset on the bank's records.

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

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

A debit memorandum from the bank indicates that the bank has deducted an amount from the depositor's account.

The depositor reconciles the bank's statement to the depositor's records.

For efficiency of operations and better control over cash, a company should maintain only one bank account.

The bank informs the depositor of bank service charges by including a debit memorandum with the monthly bank statement.

In preparing a bank reconciliation, the amount of a canceled check omitted from the depositor's records is deducted from the cash balance per books.

The framework that has become widely accepted as the standard by which companies design, analyze, and evaluate internal controls is the:

An element of internal control is:

The Sarbanes-Oxley Act of 2002 requires companies and their independent accountants to:

A firm's internal control environment is influenced by:

Which of the following elements of internal control focuses on locating weaknesses and improving control effectiveness?

(a) Where are cash equivalents disclosed in the financial statements? (b) List three examples of cash equivalents.

Adding a review of operations by an internal audit staff strengthens internal control.

Accompanying the bank statement was a credit memorandum for a short-term note collected by the bank for the depositor. This item would be included on the bank reconciliation as a(n):

List and define each of the five elements of internal control set forth by the Integrated Framework.

The Sarbanes-Oxley Act of 2002 requires companies to maintain strong and effective internal controls over recording transactions and preparing financial statements.

Separating the custody of assets from accounting for assets is a part of which element of internal control?

A credit memorandum received with a bank statement means the company's bank account has been increased.

When the petty cash fund is replenished, the petty cash account is adjusted for the total of all expenditures made since the fund was last replenished.

Bank customers are considered owners of the bank, so the bank shows their accounts as an asset on the bank's records.

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