Question 1

A company's outside, independent auditors are responsible for preparing its financial statements.

Accepted Answer

A) True 
 B)False

Question 2

Accounting controls are designed to:

Accepted Answer

A)  eliminate collusion 
B)  evaluate performance for annual merit increases 
C)  ensure low employee turnover 
D)  safeguard company assets and ensure reliable accounting records 
A)  eliminate collusion 
B)  evaluate performance for annual merit increases 
C)  ensure low employee turnover 
D)  safeguard company assets and ensure reliable accounting records

Question 3

Dent Company's unadjusted bank balance at March 31, 2014 is $3,000. The bank reconciliation revealed outstanding checks amounting to $500 and deposits in transit of $300. Based on this information, Dent's true cash balance is:

Accepted Answer

A)  $3,100. 
B)  $2,700. 
C)  $2,800. 
D)  $2,900. 
A)  $3,100. 
B)  $2,700. 
C)  $2,800. 
D)  $2,900.

Question 4

Which of the item(s) would be subtracted from the unadjusted bank balance to determine the true cash balance?

Accepted Answer

A)  Item numbers 3 and 6 
B)  Item number 5 
C)  Item numbers 3, 5, and 6 
D)  Item number 6 
A)  Item numbers 3 and 6 
B)  Item number 5 
C)  Item numbers 3, 5, and 6 
D)  Item number 6

Question 5

As of May 31, 2014, the bank statement for Feldman Corporation showed an ending balance of $17,632.52. The following information was available: $\begin{array}{llr}
\text { 1) } & \text { Deposits in transit } & \$ 3,145.00 \
2) & \text { Credit memo for interest earned } & \$ 80.00 \
3) & \text { Outstanding checks } & \$ 6,790.50 \
4) & \text { Service charge } & \$ 39.00
\end{array}$ 
Required:
Compute the true cash balance at May 31, 2014.

Accepted Answer

The answer of As of May 31, 2014, the bank...

Question 6

To have a strong internal control system, a business must have good administrative controls. Administrative controls include:

Accepted Answer

A)  the reconciliation of the bank statement. 
B)  the accuracy of the recording procedures. 
C)  assessing compliance with company policies. 
D)  maintenance of accurate inventory records. 
A)  the reconciliation of the bank statement. 
B)  the accuracy of the recording procedures. 
C)  assessing compliance with company policies. 
D)  maintenance of accurate inventory records.

Question 7

One of the requirements of the code of ethics of the AICPA is that members must act in a way that serves the public interest.

Accepted Answer

A) True 
 B)False

Question 8

Indicate whether each of the following statements regarding internal control is true or false.
-Accounting controls are composed of procedures designed to safeguard the assets of a business and to ensure that its accounting records contain reliable information

Accepted Answer

A) True 
 B)False

Question 9

Indicate whether each of the following statements about a bank statement is true or false.
-The confidentiality rules of the AICPA's code of ethics for CPAs prohibit auditors from communicating with successor auditors

Accepted Answer

A) True 
 B)False

Question 10

What is a "material misstatement"?

Accepted Answer

A misstatement, which is an er

Question 11

A company's outside, independent auditors are responsible for expressing an opinion on the company's financial statements.

Accepted Answer

A) True 
 B)False

Question 12

Indicate whether each of the following statements regarding internal controls is true or false.
-To improve operating efficiency, a company should make most of its cash payments using currency instead of checks

Accepted Answer

A) True 
 B)False

Question 13

Explain how "separation of duties" can be used as a deterrent to corruption.

Accepted Answer

When duties are separated, the work of o

Question 14

Which of the item(s) would be added to the unadjusted bank balance to determine the true cash balance?

Accepted Answer

A)  Item numbers 3 and 6 
B)  Item number 5 
C)  Item numbers 3, 5, and 6 
D)  Item number 6 
A)  Item numbers 3 and 6 
B)  Item number 5 
C)  Item numbers 3, 5, and 6 
D)  Item number 6

Question 15

How is a business's certified check treated in doing the business's bank reconciliation?

Accepted Answer

A)  It is added to the bank balance. 
B)  It is subtracted from the book balance. 
C)  It is subtracted from the bank balance. 
D)  It is not included in doing the bank reconciliation. 
A)  It is added to the bank balance. 
B)  It is subtracted from the book balance. 
C)  It is subtracted from the bank balance. 
D)  It is not included in doing the bank reconciliation.

Question 16

Which of the following is not a reason why a business needs strong internal controls over cash?

Accepted Answer

A)  A small volume of high-denomination currency represents a significant amount of value. 
B)  Ownership of cash is difficult to prove. 
C)  Cash has universal appeal. 
D)  Money is the common unit of measurement in business. 
A)  A small volume of high-denomination currency represents a significant amount of value. 
B)  Ownership of cash is difficult to prove. 
C)  Cash has universal appeal. 
D)  Money is the common unit of measurement in business.

Question 17

A bank reconciliation adjusts both the cash balance reported by the bank and the book cash balance to the true cash balance.

Accepted Answer

A) True 
 B)False

Question 18

In performing bank reconciliations, outstanding checks are

Accepted Answer

A)  Added to the unadjusted bank balance. 
B)  Subtracted from the unadjusted bank balance. 
C)  Added to the unadjusted book balance. 
D)  Subtracted from the unadjusted book balance. 
A)  Added to the unadjusted bank balance. 
B)  Subtracted from the unadjusted bank balance. 
C)  Added to the unadjusted book balance. 
D)  Subtracted from the unadjusted book balance.

Question 19

The following are examples of physical control over assets except

Accepted Answer

A)  certificates of deposit should be kept in a fireproof vault 
B)  unannounced physical counts of equipment should be conducted randomly 
C)  serial numbers on equipment should be recorded 
D)  multiple personnel should have access to vaults in case of a calamity such as a fire 
A)  certificates of deposit should be kept in a fireproof vault 
B)  unannounced physical counts of equipment should be conducted randomly 
C)  serial numbers on equipment should be recorded 
D)  multiple personnel should have access to vaults in case of a calamity such as a fire

Question 20

While preparing its bank reconciliation, Mart Company determined that its bank had collected for the company an account receivable in the amount of $950. The bank deducted a $15 collection fee. Which of the following shows the effect of the above event on the financial statements?

Accepted Answer

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

A company's outside, independent auditors are responsible for preparing its financial statements.

Accounting controls are designed to:

Dent Company's unadjusted bank balance at March 31, 2014 is $3,000. The bank reconciliation revealed outstanding checks amounting to $500 and deposits in transit of $300. Based on this information, Dent's true cash balance is:

Which of the item(s) would be subtracted from the unadjusted bank balance to determine the true cash balance?

To have a strong internal control system, a business must have good administrative controls. Administrative controls include:

One of the requirements of the code of ethics of the AICPA is that members must act in a way that serves the public interest.

Indicate whether each of the following statements regarding internal control is true or false. -Accounting controls are composed of procedures designed to safeguard the assets of a business and to ensure that its accounting records contain reliable information

Indicate whether each of the following statements about a bank statement is true or false. -The confidentiality rules of the AICPA's code of ethics for CPAs prohibit auditors from communicating with successor auditors

What is a "material misstatement"?

A company's outside, independent auditors are responsible for expressing an opinion on the company's financial statements.

Indicate whether each of the following statements regarding internal controls is true or false. -To improve operating efficiency, a company should make most of its cash payments using currency instead of checks

Explain how "separation of duties" can be used as a deterrent to corruption.

Which of the item(s) would be added to the unadjusted bank balance to determine the true cash balance?

How is a business's certified check treated in doing the business's bank reconciliation?

Which of the following is not a reason why a business needs strong internal controls over cash?

A bank reconciliation adjusts both the cash balance reported by the bank and the book cash balance to the true cash balance.

In performing bank reconciliations, outstanding checks are

The following are examples of physical control over assets except

While preparing its bank reconciliation, Mart Company determined that its bank had collected for the company an account receivable in the amount of $950. The bank deducted a $15 collection fee. Which of the following shows the effect of the above event on the financial statements?

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, Partnerships, and Corporations

Financial Statement Analysis

An Introduction to Management Accounting

Cost Behavior, Operating Leverage, and Profitability Analysis

Cost Accumulation, Tracing, and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

Filters

Exam 4: Internal Controls, Accounting for Cash, and Ethics

A company's outside, independent auditors are responsible for preparing its financial statements.

Accounting controls are designed to:

Dent Company's unadjusted bank balance at March 31, 2014 is $3,000. The bank reconciliation revealed outstanding checks amounting to $500 and deposits in transit of $300. Based on this information, Dent's true cash balance is:

Which of the item(s) would be subtracted from the unadjusted bank balance to determine the true cash balance?

To have a strong internal control system, a business must have good administrative controls. Administrative controls include:

One of the requirements of the code of ethics of the AICPA is that members must act in a way that serves the public interest.

Indicate whether each of the following statements regarding internal control is true or false. -Accounting controls are composed of procedures designed to safeguard the assets of a business and to ensure that its accounting records contain reliable information

Indicate whether each of the following statements about a bank statement is true or false. -The confidentiality rules of the AICPA's code of ethics for CPAs prohibit auditors from communicating with successor auditors

What is a "material misstatement"?

A company's outside, independent auditors are responsible for expressing an opinion on the company's financial statements.

Indicate whether each of the following statements regarding internal controls is true or false. -To improve operating efficiency, a company should make most of its cash payments using currency instead of checks

Explain how "separation of duties" can be used as a deterrent to corruption.

Which of the item(s) would be added to the unadjusted bank balance to determine the true cash balance?

How is a business's certified check treated in doing the business's bank reconciliation?

Which of the following is not a reason why a business needs strong internal controls over cash?

A bank reconciliation adjusts both the cash balance reported by the bank and the book cash balance to the true cash balance.

In performing bank reconciliations, outstanding checks are

The following are examples of physical control over assets except

While preparing its bank reconciliation, Mart Company determined that its bank had collected for the company an account receivable in the amount of $950. The bank deducted a $15 collection fee. Which of the following shows the effect of the above event on the financial statements?

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, Partnerships, and Corporations

Financial Statement Analysis

An Introduction to Management Accounting

Cost Behavior, Operating Leverage, and Profitability Analysis

Cost Accumulation, Tracing, and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

Filters